From Morningstar: 2025-03-20 08:07:00

At a meeting of the MPC, a rate hold was voted in favor by a majority of eight-to-one. Interest rate swaps data predicted a 95% chance of a hold. UK inflation rose to 3%, above the Bank’s 2% target. Global trade policy and geopolitical uncertainties have intensified, leading to a cautious approach by the Bank.

Despite the rate hold, Michael Field believes the “slow and steady” approach makes sense. The FTSE 100 fell slightly on the news, but there are still plentiful equity market opportunities. Bond investors await the government’s Spring Statement for fiscal indications. Pressure is growing on the government to address public finances.

UK GDP decline is a key reason for continued rate cuts in 2025. Higher rates cool economic activity, affecting spending and investment. The Bank revised inflation predictions to 2.8% for Q1, with growth expectations halved to 0.75%. The OECD also lowered UK growth predictions to 1.4%, citing concerns about global trade barriers.

Expectations for further rate cuts in 2025 have shifted, with interest rate swaps data showing a chance of cuts in May and August. Geopolitical uncertainty adds to market volatility. Traders are monitoring Trump’s tariffs and potential deals with Russia and Ukraine. Uncertainty remains in the economic outlook.



Read more at Morningstar: Bank of England Holds Interest Rates at 4.5%