Rabobank’s Stefan Koopman expects the Bank of England (BoE) to keep Bank Rate at 3.75% on 30 July and unchanged through 2026, even as markets still price some chance of further tightening.
Softer United Kingdom (UK) inflation, easing wage growth and weak activity data argue against hikes, but higher energy prices and geopolitical risks keep upside inflation pressures and the possibility of a later rate increase alive
BoE seen on prolonged policy hold “We expect the Bank of England MPC to leave Bank Rate unchanged at the 30 July meeting. Over the past five months, policy expectations have been outsourced almost entirely to events in the Middle East. The optimism of late May and early June has proved a false dawn, with only a limited trigger needed for Iran-US hostilities to resume.” “That gives the MPC room to hold rates.
Bank Rate is already restrictive at 3.75%, the labour market is softening, and inflation expectations remain contained. For Governor Bailey and the centre of the Committee, that should be enough to resist another hike for now.” “We therefore still expect Bank Rate to remain on hold through the rest of the year. The risk is skewed towards a hike if energy prices stay high, but that would come at a cost.