Let's just do a quick check of things based on current prices:
- August – 25 basis point rate cut: ~32% (previously ~46%)
- September – 25 basis points rate cut: ~80% (previously ~88%)
- Total interest rate cuts for the remainder of 2024: ~44 basis points (previously ~48 basis points)
Prospects of a rate cut have declined slightly faster despite headline annual inflation in the UK reaching the 2% level for the first time since 2021. This is largely due to stubborn readings in core rates and, more specifically, services inflation. The Bank of England has previously stated that it would like to make more progress on the latter especially ahead of the transition.
However, policymakers also said they were comfortable with markets pricing in a rate cut in August at the earliest. This is not on the table as September remains favored now, according to market rates. So, just be careful of that.
If the next CPI report comes in weaker than expected, it could put August back on the table. But right now, that's a very long threshold to cross.