How far will BoE move away from Fed's stance? Investors await a clearer signal
Bank of England may offer a clearer signal in the coming week on whether it plans to cut interest rates this summer, just as investors bet on a delayed outlook for easing.
Ahead of Thursday’s decision, Governor Andrew Bailey has distanced Britain from resurgent consumer price pressures in the US, pointing to “strong evidence” of UK inflation receding.
The UK central bank is widely expected by economists to keep rates at a 16-year high of 5.25%, and investors will watch closely for clues on whether policymakers see June or August as an opportunity to begin cutting borrowing costs.
Stronger-than-expected inflation data on both sides of the Atlantic have prompted traders to push back wagers on a UK rate reduction until September, with only one move fully priced this year.
However, a dovish shift in tone by Bailey and Deputy Governor Dave Ramsden in April caused some economists to reckon that the timing of BOE cuts may be closer to the European Central Bank — which is widely expected to act in June — than to the Federal Reserve, whose chief, Jerome Powell, has avoided offering a timeline for US easing.
Bailey expects UK inflation to fall close to his 2% target in upcoming data for April, though some on the nine-member Monetary Policy Committee are still concerned over underlying price pressures.
The central bank decision will be followed on Friday by gross domestic product data predicted to show the UK economy exited a shallow recession in the first
