The June decision was finely balanced, with higher-than-expected services inflation influenced by factors unlikely to increase medium-term inflation.
The CPI is expected to rise slightly in the second half of 2024 to around 2.5%, as the previous declines in energy prices dissipate (May forecast also projected H2 CPI around 2.5%).
The labor market is gradually loosening but remains relatively tight compared to historical standards.
Staff forecast for Q2 GDP is +0.5% (up from May's forecast of +0.2%), while business surveys suggest underlying quarterly growth of 0.25%.
Key indicators of persistent inflation are continuing to moderate but still remain high.
Although inflation has returned to 2%, it is important to ensure it remains low before considering rate cuts.
The bank rate's current level will be continually reviewed to determine how long it should be maintained.
The bank rate will be kept sufficiently restrictive for a long enough period to sustainably return inflation to the 2% target.
Dr. Kamaran Qader Yaqub,
Financial Consultant at
Investment Spot company.