The Bank of England held its benchmark steady at Thursday's Monetary Policy Committee meeting:
JP Morgan says that while the Bank left the door open for further hikes, if needed, many in the market now think the cycle of higher interest rates is over. Indeed JPM see the Bank on hold again at its next meeting in November and through 2024.
However, adds JPM:
- We see two key risks to this view. In terms of the domestic picture, the recent easing in services inflation was primarily driven by seasonal factors linked to airfares and hotel prices.
- "While the Bank will now be hoping that this cooling broadens to other parts of the economy, strong wage pressures stemming from structurally tight labour markets make this far from assured.
- The 25% rally in oil prices since midyear is another watch item, given the way that it could offset lower domestic energy prices in the months ahead.
Bank of England Governor Bailey
