Bank of England Hinting at a Rate‑Cut – The Wages Are Dropping, And That’s Good News!
It looks like the Bank of England is on the edge of trimming interest rates, thanks to a plummet in wage growth that’s hit four‑year lows.
Market Buzz
Money markets are singing a 84% probability that the Monetary Policy Committee (MPC) will slash the base rate to 4.75% from the current 5% at its next meeting. The consensus? A rate cut is likely to materialise in November.
What the Economists Are Saying
- Ashley Webb (Capital Economics) – “The dip in August’s wage growth, paired with a gradually loosening labor market, just adds fuel to the wide expectations that the Bank will cut rates.”
- Yael Selfin (KPMG UK) – “Encouraging labour‑market data is clearing a path for a rate cut. With the economy expected to slow, there’s more downward pressure on job demand.”
- Kyle Chapman (Ballinger Group) – “Labour demand is cooling, bringing slack back into the market. That should ripple through to services inflation, nudging the Bank’s decision.”
- Danni Hewson (AJ Bell) – “Inflation is easing, softening the urge for wage hikes. As the MPC weighs its options, the slowing wage growth is a strong check in the cut column.”
Bottom Line: A Work‑Hard‑er Market Into a Gentler Inflationary Path
When wages dip, businesses feel less pressure to pump up pay. That gives the Bank room to tighten the dial and keep inflation under control without the bitterness of over‑tightening. All signs point to a November rate cut – so hold onto your coffee, because the economy’s taking a breath!
