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Inflation stays at 2% in June: "The Bank of England must ditch its cautious and dithering approach"

ended 17. July 2024

For the second month in a row, UK inflation came in at the Bank of England’s 2% target in June. However, services inflation (a crucial indicator for the Monetary Policy Committee), remained sticky, at 5.7%. Against this backdrop, Newspage asked experts whether the Bank of England should now cut rates, and what today's print could mean for mortgages, the property market, savers and investors? Their views are below.

12 responses from the Newspage community

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Michelle Lawson
Director at Lawson Financial
A swathe of music events and festivals over the summer will have been a contributory factor in inflation staying at 2%. Hopefully the Bank of England will act with courage and not let Taylor Swift be the reason to not to drop rates on 1st August. August is one of her best songs after all.
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Jack Tutton
Director at SJ Mortgages
Inflation remaining at 2% will put more pressure on the Bank of England to cut the base rate in August. They have been wanting to see consistency with inflation to ensure it’s under control and back to target. Inflation has hit the target for two consecutive months now so it is time to relieve pressure on mortgage holders. We have seen mortgage rates coming down in the past few weeks but they are still higher than they were at the start of the year. The Bank of England could breath much needed positivity into the markets by cutting the base rate on 1st August.
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Rohit Kohli
Director at The Mortgage Stop
The latest inflation data from the ONS, with CPIH and CPI holding steady at 2.8% and 2.0% respectively, signals a clear need for the Bank of England to act decisively and cut interest rates in August. The Bank of England must ditch its cautious and dithering approach. It has to take the lead in stimulating economic activity and get ahead of the curve. A rate cut would make borrowing more affordable, potentially revitalising the property market by encouraging homebuyers and remortgagers. There is potential for two rate cuts this year, but given the Bank of England's overly cautious approach, this seems unlikely. For savers, lower interest rates may reduce returns on traditional accounts but could drive equity prices higher as investors seek better yields. Businesses would benefit significantly from reduced borrowing costs, allowing for increased investment in growth. It's time for the Bank of England to provide the necessary economic stimulus and support the broader economy.
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Hannah Bashford
Director at Model Financial Solutions
Restaurants and hotels accounted for the biggest upward trend and, with Taylor Swift in town in June, that is no surprise. Inflation has now been at target for two months in a row, so you would hope the MPC will act swiftly to cut interest rates in August to prevent a cruel summer. Borrowers remain under significant pressure and need the Bank of England to act.
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Emma Jones
Managing Director at Whenthebanksaysno.co.uk
Inflation staying at 2% could, in theory, see the Bank of England cut rates in August. Borrowers need it and the economy needs it. Sadly we know how cautious the Monetary Policy Committee can be and, once again, they may well err on the side of caution. If that first rate cut does come, mortgage rates should continue to improve and the property market could see a strong second half to the year.
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Craig Fish
Director at Lodestone Mortgages
This could go either way. An optimist would hope that because the numbers have remained the same that now is the time to make that cut, but the pessimist would say that because the numbers didn't drop, we should wait until September. Sadly there are more of the latter on the MPC so it feels like a cut is off the cards for now, much to the dismay of households and businesses up and down the UK. If the committee continue along the 'too little too late' path, there needs to be change, as they are clearly out of touch with what the UK needs.
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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
The latest inflation data presents a mixed outlook for the UK economy. While headline inflation remains stable, high core inflation and rising service costs pose challenges. Robust demand in the hospitality sector is notable, but household budgets remain pressured. Despite hopes for a base rate cut, the excitement might be premature. Homeowners and mortgage seekers should brace for steady or slightly higher interest rates if there isn’t an August cut as widely expected, as the Bank of England continues to tackle persistent inflationary pressures.
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Ben Perks
Managing Director at Orchard Financial Advisers
It is a huge relief to see inflation remain at 2%, especially given the Bank of England's poor track record of hitting it. It leaves the Monetary Policy Comittee with very little choice but to cut the base rate in August. If they opt to hold it, any rationale will fall firmly on deaf ears and people will be calling for resignations. They cannot delay any further. This stability at 2% warrants reward and borrowers need some respite, and Threadneedle Street should cut the base rate as soon as possible.
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Dariusz Karpowicz
Director at Albion Financial Advice
It's great news that inflation has hit the 2% target again in June. But can it dip any lower amid these geopolitical conditions? Possibly, but the Bank of England needs to stop dithering and begin the process of gradually lowering interest rates. This is the last piece of the puzzle to stabilise the economy. Lower rates will mean more affordable mortgages and a boost in the property market. Now's the time for decisive action, not cautious hesitation.
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Katy Eatenton
Mortgage & Protection Specialist at Eatenton Finance
Let’s hope this data delivers a rate cut in August. We desperately need something to bring some positivity back into the UK property market, and borrowers need it urgently. Unfortunately, the Bank of England may once again play it safe.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
It’s excellent news that inflation has remained at the 2% target, showing the consistency and stability that the Bank of England called for at its last meeting. The economy and borrowers everywhere now need the Monetary Policy Committee to keep their word and reduce the base rate on 1st of August and not deliver more excuses as to why they can’t.
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Chris Barry
Director at Thomas Legal
The BoE admitted they were too late raising rates after a decade of historic lows but sadly didn’t learn from their mistake. Headline inflation continues to sit at their 2% target but they once again risk being late to adjusting rates to aid the economy. I’ve given up looking at the data and have instead submitted to the inevitable fact that the base rate will be reduced as soon as the Fed make the first move.