Nomura analysts, led by George Buckley, anticipate that the Bank of England (BoE) will keep its Bank Rate unchanged at 3.75% in the upcoming policy meeting next week, with the decision expected to be announced at midday on Thursday. The analysts predict an 8-1 vote in favor of holding rates, with Huw Pill likely to be the sole member advocating for a rate hike [1].
Nomura expects the BoE to release new forecasts indicating higher inflation and slightly weaker growth. The analysts foresee no changes to policy rates through the end of 2027, although they highlight asymmetric risks: the possibility of near-term rate hikes followed by later cuts. This scenario, they argue, would not necessarily constitute a policy mistake but rather reflect the Bank's nimbleness in responding to evolving inflation risks [1].
Despite financial markets pricing in more than two rate hikes before year-end, Nomura notes that the market sees only a 2-3 basis point risk of a hike on 30 April. The overall expectation is for a prolonged policy hold, with fuller guidance from the BoE accompanying the rate decision [1].
CONCLUSION
Nomura expects the Bank of England to maintain its current policy rate, with only a slim chance of a near-term hike. The outlook is for higher inflation and weaker growth, but no rate changes through 2027, barring unexpected developments. Market sentiment remains cautious, with attention focused on the BoE's updated forecasts and guidance.