MUFG sees Bank of England (BoE) holding this week, December rate cut still base case

MUFG expects the Bank of England to hold rates steady at this week’s policy meeting, with its first cut likely in December, senior currency analyst Lee Hardman said.

“Our base case is still a cut in December — I don’t think one softer CPI print is enough,” Hardman said, adding that by then policymakers will have more data and fiscal context following the government’s budget.

He noted that while a surprise move this week “wouldn’t be a huge shock,” the probability remains low. If the BoE does hold fire, Hardman said, “we might get an initial rally in the pound, but it will likely fade as markets refocus on December.”

—

Market pricing is around 30% for a rate cut. Goldman Sachs and Barclays are among those expecting a cut: