Bank of England decision: Key interest rate expected to stay at 5%
The Bank of England is not expected to follow its U.S and eurozone peers by cutting interest rates in September.
The U.K. central bank will make its policy announcement at 12 noon in London, 7:00 a.m. Eastern.
Markets earlier this week had ben pricing in a roughly 33% chance that the BoE would trim its main bank rate by 25 basis points to 4.75%, following a similar sized cut in July.
However, a consumer prices report published Wednesday showed that though headline annual inflation was steady at 2.2%, service sector inflation – the BoE’s closely watched gauge of domestic price pressures – rose from 5.2% to 5.6%.
Consequently, says Kathleen Brooks, research director at XTB: “There is only a 15% chance of a rate cut priced in by the swaps market, and we think it is highly unlikely that the BoE will cut rates today.”
“The BoE is more predictable than other central banks, as it prefers to change interest rates at meetings where it delivers its monetary policy reports. Hence the first-rate cut came in August, and the market expects the second rate cut in November,” Brooks adds.