Bank of England set to hold interest rates as economists debate 2024 cuts

cnbc.com:

LONDON — The Bank of England is all but certain to keep its main interest rate unchanged at 5.25% for a third consecutive meeting on Thursday, but economists are split over when to expect the first cut next year.

The market is pricing an almost 100% chance of a hold on Thursday, according to LSEG, with economic data since the Bank's last meeting proving largely inconclusive.

Real GDP was flat in the third quarter, in line with the Monetary Policy Committee's projections, while both inflation and wage growth have undershot expectations and domestic demand has been weak. U.K. headline inflation fell to an annual 4.6% in October, its lowest in two years.

The latest labor market data on Tuesday indicated a continuation of recent trends, with unemployment remaining broadly flat and vacancies continuing to decline at pace.

«This fits the hypothesis of some U.S. Federal Reserve officials that, with vacancies so high, it may be possible to introduce slack into the labour market without significantly raising unemployment,» PwC Economist Jake Finney said in an email Tuesday.

Average pay including bonuses fell by 1.6% between September and October, versus an average monthly growth rate of 1.1% in the first half of the year.

Finney noted that real inflation-adjusted wages are still growing on a year-on-year basis due to a steep fall in headline inflation, suggesting the worst of the country's cost of living crisis is behind the average household.

Signs of the labor market cooling will offer some reassurance to the MPC ahead of Thursday's meeting, Finney said, especially given the lack of major surprises in the economic data over the past month.

U.K. GDP shrank by 0.3% in October, new figures showed Wednesday, well below the flat