The Bank of England is expected to keep interest rates unchanged at 4.25% at its meeting this Thursday, 19 June, as the monetary policy committee keeps to its "gradual and careful" approach to easing after cutting interest rates last month.
Recent data has supported further rate cuts, with signs of economic slowdown and a softening labour market as May's payroll report showed the largest job losses since the pandemic, while April GDP contracted by 0.3%.
The main interest is whether we see a 6-3 or 7-2 vote in favour of holding rates, something not just for economists and BoE anoraks, but potentially also a key indication of what direction the next meeting in August will go.
At May's MPC meeting, two members, Swati Dhingra and Alan Taylor, favoured a larger cut of 50 basis points and are widely expected to support another cut.
Based on the recent soft macroeconomic data, Barclays economist Jack Meaning also sees Deputy Governor Dave Ramsden voting for an immediate reduction, while other economists suggested BoE chief economist Huw Pill and external member Catherine Mann also potentially switching to favour a cut, with Mann having previous for unexpected U-turns.
More widely, market expectations are that August will see the next rate cut, with no significant changes to the Bank's language predicted, with guidance still likely to emphasise a “gradual and careful” approach.
Differences of views within the committee, trade uncertainty following Donald Trump's uncertain appoach, and recnet data discrepancies continue to support the MPC keeping the gradual approach to easing, said Dani Stoilova, economist at BNP Paribas.
"Given continued uncertainty and as the MPC has shown a preference for making meaningful changes to its guidance at monetary policy report meetings, we also expect it to maintain its references to a 'gradual and careful' approach and policy remaining 'restrictive for sufficiently long'.
"Beyond the June meeting, we continue to expect a terminal rate of 3.50% in Q1 2026 and the next rate cut to be seen August," she said.
Barclays' Meaning says he expects the meaning minutes to show that, "for some in the majority bloc, the decision was finely balanced, indicating a shift in the balance of risks, as viewed by the decisive voter, towards a more disinflationary scenario as the labour market loosens and activity slows", making an August cut even more likely.
If the UK inflation reading on Wednesday is not especially strong, Enrique Diaz-Alvarez, economist at Ebury, said he felt the MPC "may well signal that the next cut could come in the summer".
This signal may come in the form of a tweak to the bank’s hawkish bias, or in the voting pattern, with the possibility that two or three officials vote for an immediate cut on Thursday.