U.K. Consumers Could Force the Next BOE U-Turn on Rates

Consumer spending has been a source of strength since the Brexit vote, but now it looks like a weakness -- saving is miles below what Bloomberg Economics thinks can be sustained in the long term, creating a risk of retrenchment. If that were to happen quickly, as it has in the past, the Bank of England could find itself cutting rates, not lifting them. Data suggest that the recent decline in saving ratio is increasingly explained by a desire to smooth through the real-income shock experienced over the past 18 months.

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