By James Sillars, business and economics reporter
The latest Bank of England interest rate decision is revealed at midday today.
We may not hear the word “cut” but we will certainly be told about “uncertainty”.
Let me apologise, right now, for the number of times you are about to read that last word. There’s a theme here.
The Monetary Policy Committee is widely expected to make no change to Bank rate from its current 4.25% level.
The message from the majority of rate-setters has been of a gradual approach to reductions in the cost of borrowing this year, largely because of trade war-related (sorry) uncertainty.
Last month we heard about “rising uncertainty” and “a lot more uncertainty” and, given events in the Middle East, that message could well be repeated (I won’t say it) given the threats the Israel-Iran conflict pose to inflation.
Oil and natural gas costs have seen double-digit percentage increases over the past few weeks, raising the possibility of another energy-led price shock ahead.
Data yesterday also showed that the headline rate of inflation remains stubbornly above target at 3.4%.
But providing a boost towards the rate cut cause are inflation figures showing, when the effects of volatile elements such as energy and food are stripped out, price growth is coming down nicely.
Services inflation was particularly encouraging.
Employment figures last week also showed the pace of wage growth continuing to ease and the unemployment rate rising.
So, there are hopes we could get a rate cut in the coming months.
LSEG data shows financial market investors are expecting two more by the year’s end, probably taking Bank rate to 3.75%.
However, with Donald Trump in the White House and the threat of events in the Middle East expanding, the minutes of the MPC meeting will reflect even greater caution on the outlook.
You can be certain of that.
