Bank of England Cuts Interest Rates, but Signals Stickier Inflation

Published On Nov 7, 2024, 7:10 AM

The Bank of England has cut interest rates by a quarter point to 4.75%, marking the second cut since August. Policymakers expect future cuts will be gradual due to rising inflation expectations linked to increased government spending and taxes, despite current inflation being below the 2% target. The central bank is cautious about lowering rates quickly, as gas and electricity prices are expected to rise, which may push inflation back above the target in the coming months.

Read full article

Stock Forecasts

XLFView XLF chart on TradingView

Negative

With the Bank of England cutting interest rates and signaling a cautious approach to further cuts in light of rising inflation, the banking sector may face increased profitability pressures. As interest rates fall, banks typically see a squeeze on their net interest margins. Additionally, as inflation is projected to climb due to energy prices, consumers may reduce spending, affecting consumer-driven sectors. Financials may experience pressure, whereas utilities could see an uptick in interest due to the ongoing inflation and expected price increases.

Related News

Fed set to announce latest interest rate move in wake of Trump's election win

Nov 7, 2024, 6:00 AM

The Federal Reserve will announce its next interest rate move on Thursday in the wake of the U.S. election, with markets expecting the central bank to cut rates by 25 basis points.

XLF

Here’s What to Watch as the Fed Meets Thursday

Nov 7, 2024, 5:03 AM

Federal Reserve officials are widely expected to cut rates by a quarter point, as uncertainty about a second Trump presidency looms large.

XLF

Trump trade sparks stock rally ranging from banks to crypto to DJT

Nov 6, 2024, 4:07 PM

DJT, bitcoin, and other trades that had moved with Donald Trump's betting odds to win the 2024 presidential election soared on Wednesday.

XLF
DJT
MSTR