However, those expecting the next rate cut in September should be cautious. Most of the surprise came from volatile components. The seasonally adjusted change in the core rate was also only slightly below the average of the last 14 months and therefore still far too high. The all-clear is still not yet given, Commerzbank’s FX Michael Pfister notes. Growth is unlikely to stop the BoE from cutting interest rates “If inflation does not pave the way for further rate cuts, growth could.
” “The most concrete argument was that household consumption has hardly grown at all. The BoE is not wrong here, and gives an indication of where the doubts about growth are coming from. After all, most of the surprisingly strong growth in the first quarter was due to net exports. In practice, imports have fallen more sharply than exports, which is not necessarily a sign of strength in the UK economy. The underlying growth trend is therefore likely to be lower.