Ahead of the Bank of England’s upcoming base rate decision, Steve Matthews, investment director, liquidity at Canada Life Asset Management, warned not to expect a cut too soon.
Matthews said: “Looking ahead to Thursday’s Bank of England interest rate decision, we expect a 7-2 vote in favour of no cut.”
This was despite positive recent trends that have led some commentators to predict a long-awaited drop to the base rate.
Matthews said: “Despite recent data supporting a cut – such as the unemployment rate rising to 4.4% and expectations that the CPI will hit 2% on Wednesday – concerns about upcoming wage data and services inflation persist.
“While the European Central Bank made a move last week, the Federal Reserve is taking a more cautious approach.
“This gives the Bank of England additional opportunity to make a well-timed decision.
“Although there is light at the end of the tunnel, we are still firmly in the tunnel.
“We maintain our view that a first cut of 25bps in August is still the most likely scenario.”
