J.P.Morgan expects BoE to deliver its first rate cut in Q4 2024

(Reuters) -J.P.Morgan said it now expects the Bank of England (BoE) to deliver 50 basis points of interest rate cuts in the fourth quarter of 2024, compared to an earlier expectation of a pause at current levels throughout 2024.

"The current pace of loosening in the labour market suggests there is a risk the BoE could ease a little earlier. But we expect the bulk of monetary policy normalization to occur in 2025", Allan Monks, JPM economist, said in note dated Tuesday.

The brokerage expects a near-term economic upswing in the UK driven by strong income and business confidence, but warns of a potential recession by late 2024 as past rate hikes and fading stimuli pose risks.

BoE Governor Andrew Bailey said on Tuesday the central bank's stance on interest rates did not need changing. The BoE kept its interest rate on hold for the second meeting in a row this month after 14 consecutive hikes to fight double-digit inflation.

Bailey said that investors were placing "too much weight" on recent data showing a fall in headline inflation, and added that getting inflation all the way back to 2% would be a slow process.

(Reporting by Priyadarshini Basu; Editing by Nivedita Bhattacharjee and Mrigank Dhaniwala)