Key Takeaways:
Futures markets do not anticipate an interest rate cut from the Bank of England for the rest of the year. The interest rate setting meeting coincides with the release of UK inflation data for August. Political and economic volatility sets the stage for the Bank of England’s decision.

Following the interest rate cut in August, the Bank of England is expected to maintain the current monetary policy during its upcoming meeting. The likelihood of a rate cut stands at just 2.1% based on interest rate swaps data, with UK interest rates remaining at 4%.

Investors are closely monitoring the upcoming MPC meeting for another potentially close vote, which could add to uncertainty about the Bank of England’s future actions. Economists believe that the decision to cut rates may be complicated by the recent resurgence in inflation in the UK.

Market pricing at the beginning of 2025 suggested quarterly rate cuts, but expectations for a November rate cut have diminished. Further cuts in November and December are seen as less likely, which would break the pattern of rate cuts started in August 2024.

The Bank of England faces challenges amid global and domestic issues, including uncertainty about the impact of US tariffs and a slowdown in GDP growth. Concerns about a potential recession persist due to a slowdown in hiring and other economic indicators.

Headline inflation in the UK remains above the 2% target, with expectations for a rise to 4% in September. Political turmoil and fiscal concerns have led to increased uncertainty over rate cuts, with the bond market reacting to global trends and local developments.

The Bank of England is scheduled to make interest rate decisions on Nov. 6 and Dec. 18, 2025, with provisional dates set for Feb. 2, March 19, and April 30, 2026. The Bank’s governor, Andrew Bailey, has expressed doubts about the timing of the next rate cut.

Read more at Morningstar: Will the Bank of England Cut Interest Rates in September?