Bank of England likely to keep interest rate unchanged as inflation stays stubborn
The post Bank of England likely to keep interest rate unchanged as inflation stays stubborn appeared com. The Bank of England (BoE) will announce its latest policy decision on Thursday, marking its seventh rate meeting of 2025. Most analysts expect the ‘Old Lady’ to hold fire and keep the base rate at 4%, following the cut delivered back on August 7. Once the announcement lands, the bank will publish the meeting Minutes, offering a closer look at the debate behind the decision. The market’s base case is for no change, but a 25-basis-point cut isn’t completely off the table. With the UK economy looking increasingly fragile and the fiscal picture continuing to worsen, there’s still a case for the BoE to ease a little further. Cooling inflation and fiscal woes The Bank of England kept interest rates on hold at 4% in September, after the Monetary Policy Committee voted 7-2 to stay put. Members Swati Dhingra and Adam Taylor backed a 25-basis-point cut, following the quarter-point reduction delivered in August. In its latest statement, the BoE stuck to its forecast that inflation will peak around 4% this month before gradually easing back to the 2% target by mid-2027. On growth, the bank staff expect GDP to rise 0. 4% in the July-to-September quarter, hardly booming, but still avoiding contraction. Fresh data from the Office for National Statistics showed headline CPI inflation rising to 3. 8% in September, while core inflation (excluding food and energy) eased slightly to 3. 5%. Services inflation, often watched closely by the BoE, stayed stubborn at 4. 7%, suggesting that underlying price pressures haven’t fully cooled. Meanwhile, the fiscal picture remains challenging. Chancellor Rachel Reeves warned on Tuesday that broad tax rises could be coming, as she seeks to avoid a return to austerity. She described her upcoming second annual budget as one built on “hard choices”, protecting public services while keeping Britain’s debt in check. With.