Bank of England cut rates

This afternoon (7 November 2024), the Bank of England (BoE) made the decision to cut rates by 0.25% down to 4.75%.

The rate cut is within expectations for markets, coming off a decision to hold at the last meeting in September. Following this month’s rate cut, the BoE has signalled it’s unlikely we will see further movements this year as forecasts suggest Rachel Reeves’ budget would increase inflationary pressure on the UK economy.

BoE governor Andrew Bailey highlighted the importance of remaining patient with interest rates, to avoid any inflationary surprises. However, eyes remain focused on how the economy behaves, if all remains in line with expectations then we can look forward to further cuts in 2025.

September saw inflation hit 1.7%, the first time inflation has been below the Banks target of 2% since 2021. The BoE expects this to increase over the coming months.

The decision to cut rates has signalled to markets that the BoE is taking a cautious approach, expectation is building that further cuts are unlikely before Q1 of 2025.

Markets expected to see a rate cut today and as a result, seeing little reaction following the bank’s decision.

Our focus remains towards ensuring our portfolios are positioned for changing economic landscapes, maintaining a well-diversified approach, able to handle different market conditions.