Bank of England expected to hold rates as inflation outlook stays critical
The Bank of England is expected to keep its policy rate on hold at 4.5 percent at today's Monetary Policy Committee meeting; a BBC-cited analyst survey points to seven of the nine members voting to hold. Annual inflation at 3.4 percent, well above target, and energy-cost uncertainty after the Iran conflict have stalled the cutting cycle. Sterling is trading steady on expectations of the decision.
Earlier BBC reporting noted that recent data showed food-price gains slowing while services inflation remained sticky at 5.1 percent. At the last meeting, two members voted for a 25-basis-point cut, but the rebound in Brent crude on Strait of Hormuz uncertainty in recent weeks has pushed the cutting camp into a minority.
Governor Andrew Bailey's press conference at 12:00 GMT will be watched closely for forward guidance. Market pricing now implies just one 25-basis-point cut by year-end, against three priced in at the start of the year.
With Treasury pressure on public finances continuing, the BoE's balance-sheet runoff programme is also in focus. Sterling held at 1.28 against the dollar and the FTSE 100 opened flat.
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