The Bank of England is expected cut interest rates by 25bp to 5.25 percent.
This would be the second rate cut for the central bank since they began lowering interest rates in December. Getting the BoE to cut rates has been like pulling teeth. Each rate cut that they have doled out has been a reluctant one. Tomorrow will be no different because the UK has to balance slowing growth with rising inflation. According to the shadow committee that tries to vote like the BoE would, only 5 of the 9 members will favor a rate cut. This means that the statement may not be as dovish as everyone expects and if that is the case, the British pound may actually rally. UK economic data has also been mixed with a drop shop prices and a decline in consumer confidence offset by yesterday’s rise in service sector PMI. Before the BoE rate decision, we do have UK industrial production, which is suppose to be weak following the drop in manufacturing PMI.