Markets trim expectations for a September rate increase after the Bank of England adopts a cautious stance amid softer inflation data.
The Bank of England left its policy rate unchanged at 3.75%, with Governor Andrew Bailey emphasizing no shift toward tightening despite geopolitical risks. The decision followed softer-than-expected inflation pressures, prompting traders to reduce bets on a September hike.
A three-member minority, including Chief Economist Huw Pill, voted for a 25bps increase, while the majority cited easing price trends. The BoE reiterated its readiness to act if inflation persists but stopped short of signaling imminent moves.
Market reaction was muted, with investors paring back rate hike expectations for the coming months. The pound showed limited volatility as the dovish hold contrasted with earlier tightening bets.