Bank of England likely to cut interest rates next month – London Business News | Londonlovesbusiness.com

Economists have said that the Bank of England is likely to cut interest rates as the wage growth has now hit its lowest level in four years.

According to money markets there is an 84% that the MPC will vote to cut the base rates to 4.75% from the current 5% next month.

Sky News reported that Ashley Webb, UK economist at Capital Economics, said, “The further fall in wage growth in August, together with some signs that the labour market continued to loosen gradually, adds further support to widespread expectations that the Bank of England will cut interest rates.”

Yael Selfin, chief economist at KPMG UK, said it’s “encouraging labour market data clears path for an interest rate cut.”

She added, “With the economy set to slow in the coming months, this is likely to add further downward pressure on labour market activity.

“We anticipate it will enable the MPC to cut interest rates in the upcoming November meeting.”

Money Week reported, Kyle Chapman, FX markets analyst at Ballinger Group, said, “The headline here is that the trend in the labour market is still going in the right direction for 2% inflation, and that should support a steady stream of rate cuts from the Bank of England.

“Labour demand is cooling off and that is returning some slack to the market, which is bringing down wage growth, and that should filter through into the all-important services inflation figure over the coming months.”

Danni Hewson, head of financial analysis at AJ Bell said,  “With inflation falling, the pressure on bosses to up wage packets has lessened and as those nine rate setters consider whether to cut interest rates next month, the further slowing of wage growth is likely to be a check in the cut column.”