British Queen celebrates


The Conservative Party's hopes for a reduction in the Bank of England's main interest rate from its 16-year high of 5.25% are expected to be disappointed on Thursday,

despite a notable fall in inflation.

Recent official data revealed that the UK's inflation rate, measured by the consumer prices index, decreased to 2% in the year to May, down from 2.3% the previous month. This marks the first time since July 2021 that inflation has met the Bank of England's target, largely driven by a reduction in food prices.

However, some members of the Bank's Monetary Policy Committee (MPC) remain concerned about persistent price increases in the services sector and accelerating wage growth, which could trigger an inflation resurgence if rates are lowered prematurely.

Luke Bartholomew, deputy chief economist at asset management firm abrdn, stated, "That is why an interest rate cut tomorrow is still very unlikely. But we think the Bank’s communication tomorrow will set out a path for a cut in August, which is now looking increasingly likely.”

Prime Minister Rishi Sunak had counted on a more stable economic environment to bolster his Conservative Party's prospects in the upcoming early election on July 4. However, recent opinion polls show little movement, with the main opposition Labour Party, led by Keir Starmer, expected to potentially return to power for the first time since 2010. Photo by Eluveitie, Wikimedia commons.