Bank of England Not in a Rush to Consider Rate Hikes

ANZ expects the Bank of England to keep policy rates unchanged at its next meeting, as current restrictive settings are deemed sufficient amid disinflationary pressures. Market pricing for rate hikes in 2026 is viewed as premature.

Key Takeaways

• 1.The Bank of England is expected to maintain its policy rate at the upcoming meeting, emphasizing data dependence rather than pre-emptive hikes.
• 2.Underlying disinflationary forces, such as the negative output gap and labour market slack, support a 'wait and see' approach.
• 3.Market expectations of monetary tightening are considered premature, with core inflation and wage growth trends showing cooling.

Table of Contents

• Bank of England not in a rush to consider rate hikes
• MPC to keep policy rate unchanged, decision unlikely to be unanimous
• Data and survey findings support a cautious 'wait and see' approach
• Bottom line

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