Fall in service inflation ‘very encouraging’ for interest rates cut next month – London Business News | Londonlovesbusiness.com

The fall in service inflation is ‘very encouraging’ for the Bank of England (BoE) and could signal another interest rate cut next month, a financial expert said.

Services CPI now stands at 5.2%, down from 5.7% and well below the BoE’s 5.6% forecast.

Meanwhile, the UK’s inflation rate has risen for the first time this year, rising to 2.2%, just above the BoE target of 2%.

Charu Chanana, Head of FX Strategy at investment platform Saxo, said cooling service inflation is ‘very encouraging’ and sends a ‘dovish’ signal to the BoE.

Charu added that the markets will ‘likely move towards another rate cut’ next month.

Saxo’s Head of FX Strategy, Charu Chanana, said, “Cooling services inflation is sending a dovish signal for the Bank of England (BOE). It is not just the headline drop in services inflation to 5.2% from 5.7% in June and BOE’s expectation of 5.6%, but the breadth of cooling in the services inflation components is also very encouraging.

“The September BOE meeting is live, and markets will likely move towards pricing in another interest rate cut if signals on the Fed to start easing in September continue to build.”