BOE Prepares Fifth Consecutive Rate Cut Amid Inflation and Growth Concerns

The Bank of England is poised to cut interest rates to 4%, the lowest level in over two years, as it navigates a weakening economy and labor market strain. A 25 basis point reduction—widely anticipated by economists—would mark the fifth consecutive quarterly easing, placing UK rates below the U.S. Federal Reserve's benchmark of 4.25%–4.5%.

Inflation reacceleration complicates the calculus. June's 3.6% print exceeded forecasts and hit a 17-month high, driven by energy and food costs. The MPC maintains its 'gradual and careful' approach, but may revise its annual inflation projection toward 4%. Governor Bailey dismisses the spike as transient, while Chief Economist Pill warns of wage-price spiral risks.

Growth headwinds intensify as spring contractions and April's payroll tax hike fuel job losses. The rate decision, due at noon London time, will be followed by a press conference scrutinized for clues on whether monetary policy can outpace stagflationary pressures.