August 19, 2024
UK GDP rose by 0.6% in Q2 over the quarter and by 0.9% over the year. It is the second robust quarter growth in this year, however a bit less stronger than in Q1 when GDP increased by 0.7% . The economy has not experienced such high rates of growth for at least 2 previous years (see chart).
Recovery in the economy in the first half of the year occurs despite negative impact of tight monetary policy which implies discouraging businesses from investment and consumers from spending.
In the case this tendency persists the BOE will be less dependent from the need to cut rates too quickly to support the economy as it was the subject of concern just recently.
In the situation when inflation keeps just a little above the target the current rate of economic growth gives the BOE the chance to conduct moderate monetary policy to keep inflation and the economic activity in good balance.
⭐️Summary:
UK GDP rose at a hefty rate of +0.6% in Q2 following even better result of +0.7% in Q1. With inflation cooling recently close to the target this tendency will allow BOE to keep rates at moderate levels without worrying price pressure to get out of the control. This means the rates will be declining but not so fast as expected before.