The Possibility of Additional Interest Rate Cuts in September Is Not High
The UK Consumer Price Index (CPI) inflation rate for July was recorded at 2.2% year-on-year. This marks the first time this year that the monthly inflation rate increased compared to the previous month.
On the 14th (local time), the UK Office for National Statistics (ONS) announced this figure. It fell short of the market experts' forecast of 2.3% and the Bank of England's (BOE) forecast of 2.4%.
The core consumer price inflation rate, excluding food and energy, was 3.3%, down from 3.5% in June. This is the lowest level since September 2021.
The inflation rate in the services sector was 5.2%, down from 5.7% the previous month. This is the lowest since June 2022. It was below the expert forecast of 5.5% and the BOE forecast of 5.6%.
Following the inflation rate announcement, which was below expectations, the market slightly increased the possibility of an additional interest rate cut in September. However, the likelihood is still considered low.
Earlier, after the consumer price inflation rates in May and June reached the target of 2%, the BOE Monetary Policy Committee lowered the base interest rate by 0.25 percentage points to 5% annually on the 1st of this month.
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