Analysis: The Bank of England may resume interest rate cuts this year

Andrew Wishart of Berenberg stated in a report that the Bank of England may resume interest rate cuts before the end of 2026. He said that the lower-than-expected inflation rate in May indicates that the risk of indirect impacts from the energy price shock is limited. Wishart noted that, meanwhile, the scale and duration of the shock caused by the Iran war are expected to be significantly lower than the central bank's expectations. He added that a weak labor market is hindering wage growth, and wage growth has already fallen below a level consistent with 2% inflation. “Although the Monetary Policy Committee may still be divided, we believe that enough members are sufficiently reassured about inflation and concerned enough about the labor market to implement rate cuts before the end of the year.”