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Cooling labour market will be crucial for rate cuts

The possibility that the labour market is tighter than it looked has placed a question mark over when the Bank of England will be able to cut interest rates. Our forecast for services inflation and wage growth to fall only slowly is why we don’t think interest rates will be cut before late in 2024. That said, if the Bank shifts its focus towards more forward-looking indicators earlier than we expect, interest rates could be cut sooner.

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