Commenting on today’s announcement on interest rates by the Bank of England, Anais Caldwell-Jones Principal in LCP’s Investment team, said:
“So, for the first time in more than four years, the Bank of England has reduced interest rates by 0.25%, from 5.25% to 5.0%. The decision couldn’t have been more finely balanced, with 5 of the 9 MPC members opting for a cut. That’s not a surprise, given the mixed bag of economic indicators the Committee had to grapple with. While some measures, such as continued strength in services inflation might have indicated caution, others including rising unemployment, falling job vacancies and slowing earnings growth tipped the balance in favour of a cut.”
Caldwell-Jones went on to add:
“Whether this is one and done or the start of a series of cuts is hard to say, in the short term at least. Higher energy prices will put upwards pressure on inflation while the Committee will presumably be watching closely for any knock-on effects from recent inflation-busting public sector pay deals. No doubt, future decisions will be driven by the data, however murky that turns out to be.”