Inflation rise might “shatter hopes” of a September Bank Rate cut, says Phoebus

14 August 2024

In light of this morning's 0.2% rise in July CPI inflation from the Office of National Statistics, please find below comment from Rich Pike of Phoebus.

Richard Pike, chief of sales and marketing at Phoebus, who predicted the rise last month, said: “This first rise in inflation in 2024 might shatter hopes for a second cut in the Bank Rate on 19th September.

“In their August Monetary Policy Report, the Bank of England did predict a slight uplift in inflation, and advised a cautious approach to further rate cuts. It was already a close 5-4 vote by committee members in August so, with rising inflation, it will be a surprise if they don’t stick at 5% come September.

“It’s a real balancing act. On the one hand, you have economists warning of increasing inflationary pressures in the coming months. On the other hand, unemployment is expected to rise, which would put more pressure on the economy when it’s just starting to recover from the 2023 recession.

“It will be interesting to see what tomorrow’s monthly GDP figures look like from the Office for National Statistics. They will also influence the Bank’s September decision on whether or not to drop the bank rate.”