May 22 Reuters Goldman Sachs, Barclays and Morgan Stanley said on Wednesday that a June rate cut from the Bank of England BoE now seems less likely, following a smallerthanexpected drop in British inflation.

Goldman said the British central bank will start reducing interest rates from August, dropping its earlier forecast of cuts beginning in June.

The consumer price index CPI rose by 2.3 in the 12 months to April, down sharply from March39;s 3.2 increase and its lowest since July 2021, the UK39;s Office for National Statistics said on Wednesday.

But the BoE and economists polled by Reuters had forecast a bigger drop to 2.1, just above the central bank39;s 2 target, after a big cut to household energy tariffs in April.

Goldman expects the BoE to reduce rates twice this year, versus a prior forecast of three cuts.

Given firmer incoming price and wage data, we no longer expect a June bank rate cut, said economists led by Sven Jari Stehn.

Data last week showed British wages grew by more than expected, but other figures suggested the labor market is losing some of its inflationary heat.

Barclays said it no longer expects the BoE to deliver its first rate cut in June, while keeping its forecast of three cuts of 25 basis points in 2024 under review for further UK activity data later in the week.

Barclays said the upside in services inflation will concern the BoE since it consider this the most relevant measure of inflationary persistence.

Given the extent and broad…