With the UK economy faltering, inflation still simmering, and global trade tensions escalating, it’s a challenging moment to be a central banker.
At noon today, the Bank of England will announce whether its policymakers have decided to cut interest rates or keep them unchanged — and, importantly, whether the decision was unanimous.
The consensus in the City is for a 0.25 percentage point reduction, bringing the Bank Rate down from 4.25% to 4.0%. However, with unemployment rising and economic indicators weakening, some members of the nine-strong Monetary Policy Committee (MPC) may push for a deeper cut.
Others, however, may argue for caution. With inflation climbing to 3.6% in June, more hawkish voices on the committee could favour leaving rates on hold to avoid stoking further price pressures.
Guillermo Felices, global investment strategist at PGIM Fixed Income, believes a quarter-point cut is “almost a done deal,” and expects further easing ahead:
“We expect a further 50 basis points of rate cuts over the next three meetings, as the MPC begins to place greater emphasis on the deteriorating labour market.”
At the previous meeting, the vote to hold rates came with a 6–3 split, suggesting that urgency to loosen policy is already growing among some members.
The Bank must also consider the broader global picture. While the UK’s direct exposure to US tariffs is limited thanks to its trade relationship with Washington, the ripple effects of Donald Trump’s trade war continue to add uncertainty to the global economic outlook.
