Traders reassess Bank of England rate cuts as UK grows at fastest rate in nearly 3 years

LONDON — A slew of commentary from the Bank of England and a better-than-expected economic growth number have left traders and investors scrambling to refine their bets on when the U.K. central bank will start to cut its benchmark rate.

Investors had been eagerly awaiting any indicators in the hope that they would provide hints about when cuts may begin. The BOE's benchmark rate helps price all sorts of loans and mortgages in the country and has risen rapidly over recent years to help tame high inflation.

Markets on Friday were pricing in an around 48% chance of a rate reduction in June according to LSEG data, slightly higher than Thursday's 45% probability.

Economists at Swiss bank UBS were among those who shifted their view on when the BOE may lower interest rates, saying they were now expecting the first rate cut to take place in June rather than August.

"The broader message and the tone of the MPC were more dovish than we had anticipated," they said in a note published after the BOE's latest interest rate decision.

The central bank on Thursday said it would leave interest rates unchanged for now, and stressed that a June rate cut was in no way guaranteed. Two members of the Monetary Policy Committee voted to reduce rates, one more than at the BOE's previous meeting.

"June is not a fait accompli, but each meeting is a new decision," BOE Governor Andrew Bailey said in a post-meeting news conference.

UBS cited changes to the BOE's forward guidance, inflation expectations and comments from Bailey regarding the impact of increased national living wages on overall wage growth as reasons for its changed expectations.

The Swiss bank now expects rates to be cut in June, August and November, it said, by 25 basis points each.

The BOE's