In some ways, the Bank of England’s hawkish tone at its policy meeting on Thursday makes sense. However, it’s striking just how little weight the Bank is placing on the downside risks to inflation. We have not changed our view that the Bank will cut rates by 25 basis points in November, February, April and July. But if services inflation and wage growth remain close to 5.0% this year, the unemployment rate stays low and medium-term inflation expectations rise further, we will be reconsidering our view.
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