Markets see strong odds of BoE rate hold

August 08, 2025 (MLN): Markets priced in over a 90% chance that the Bank of England would hold rates at its next meeting, though analysts remained split on the path ahead.

Capital Economics expects the central bank to cut at every meeting until the base rate reaches 3% next year, citing anticipated labor market weakness and falling inflation, but is less certain about a November move after a shift in tone from the Bank.

Santander UK sees no further cuts this year, pointing to “ugly inflation optics” and the upcoming budget from Chancellor Rachel Reeves, as CNBC reported.

Barclays, however, maintains November as its base case for another cut, warning that budget measures could weigh on GDP growth and inflation.

On Thursday, the Monetary Policy Committee reduced the key interest rate by 25 basis points to 4% in a 5–4 split vote.

Governor Andrew Bailey told CNBC that the path for U.K. rates remains downward but described the situation as “finely balanced,” with uncertainty over the pace of future moves.

Bailey highlighted lingering inflation risks, which hit 3.6% in June, a weakening labor market, and the impact of new U.S. tariffs, while noting that domestic factors remain the main influence on policy decisions.

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