Can the Bank of England slash rates multiple times this year?

Bank of England May-Make‑It‑Happen: Rate Cuts on the Horizon

A new summer blast of inflation data has traders nudging the Bank of England (BoE) toward a series of rate cuts. While the 2.2 % CPI rise in July is modest, the slashing of services inflation to a 2‑year low could spark the first of several reductions before the year ends.

What the Numbers Say

July CPI climbs to 2.2 % from a 2 % plateau in May‑June.
Services CPI drops from 5.7 % to 5.2 %, a plunge many economists claim was bigger than expected.
Money markets now see a 45 % chance that rates will fall to 4.75 % by September.
Projections point to at least two cuts this year, with the base rate potentially slipping as low as 4.5 %.

Voices from the BoE and Allies

Yael Selfin, chief economist at KPMG UK, stresses that the “relatively subdued” July inflation — thanks to softer food prices and a lingering dip in energy costs — should give MPC members some breathing room. “It’s a relief,” she says, “especially when the BoE’s own forecast hinted at a sharper rise.”

Deutsche Bank echoes the sentiment. “Another CPI report is coming before September’s decision, and next round of inflation and labour‑market data will be critical. We could see multiple cuts if conditions stay favorable.”

BoE governor Andrew Bailey reminds everyone to be careful: “We must keep inflation low but avoid cutting rates too quickly or too much.”

Capital Economics’ deputy chief Ruth Gregory weighs in, noting the sharp drop in services inflation is a sign the disinflation engine is humming. “It opens the door to more cuts later, and we’re seeing greater-than‑anticipated declines,” she says.

Opposing Viewpoints & Market Sentiment

Neil Birrell of Premier Miton Investors hints that strong second‑quarter GDP figures could delay the next cut, as policymakers feel secure in the data.
ICAEW economics director Suren Thiru counters, suggesting that the recent burst in consumer spending (thanks to Euro 2024 hype) and minuscule inflational jumps might stall rate reductions, buying the BoE time to evaluate domestic price pressures.

Bottom Line—Why It Matters

For the average Briton, a lower interest rate could mean cheaper mortgages, lower loan interest, and a ray of hope for the economy. But during the process, policymakers are treading carefully, balancing the need to keep inflation in check while nudging the economy toward sustainable growth.