Bank of England to Cut Bank Rate to 4.75% on Nov. 7

• The Bank of England (BoE) will cut its Bank Rate by a quarter-point on Nov. 7 to 4.75%, according to all 72 economists polled by Reuters, but a near-two-thirds majority expect no move in December, suggesting the BoE will stick to a cautious approach.
• British inflation plunged to a three-year low of 1.7% in September from 2.2%, below the BoE's 2% target. That leaves room for the Monetary Policy Committee (MPC) to cut rates next week after pausing in September, following a narrow vote to start easing in August.
• The British economy is still performing relatively well, with the prospect of an increase in investment from British finance minister Rachel Reeves' budget due this week. BoE Governor Andrew Bailey and MPC member Megan Greene welcomed the recent decline in inflation but downplayed its significance.
• Another MPC member, Catherine Mann, said the cooling of price growth has "a long way to go", suggesting a succession of cuts at each meeting may not yet be on the cards". Favourable inflation data in the interim between meetings has likely strengthened confidence among committee members that inflation is on a sustainable trajectory to target," said Ellie Henderson, an economist at Investec.
• Still, even if the BoE opts to cut twice more this year, it would still be moving slower than its peers. The U.S. Federal Reserve and the European Central Bank have cut interest rates by 50 and 75 basis points, respectively, and are both expected to have delivered a total of 100 basis points of cuts by year-end, compared with only 50 basis points from the BoE.
• Median forecasts showed the Bank Rate at 3.50% by the end of 2025, slightly lower than the September survey. Views ranged between 4.25% and 2.75%, with no majority.

(Source: Reuters)