Societe Generale economists report that the Bank of England (BoE) is expected to remain on hold as UK headline CPI stays above target, with markets pricing around 70 basis points of BoE easing in 2026 despite pushback from the Monetary Policy Committee (MPC) members. The economists anticipate no rate cuts this year, citing higher fuel costs that are likely to push headline CPI to approximately 3.2% year-on-year in March, which is about 0.5 percentage points above the BoE’s February Monetary Policy Report projection. They expect inflation to remain in the 3–3.5% range through 2026, but note that slack in the economy, rising joblessness, and soft consumption should limit second-round inflation effects. The March Decision Makers’ Panel survey is highlighted as a key upcoming data point, expected to capture firms’ CPI and wage expectations following the rise in wholesale energy prices [1].
Meanwhile, TD Securities analysts expect the Bank of Canada (BoC) to maintain a dovish tone in its March Summary of Deliberations, emphasizing excess supply and recent disinflationary progress. The analysts believe the BoC has ended its easing cycle and will hold the overnight rate at 2.25% through 2026, despite stronger headline inflation, before potentially hiking rates back toward neutral in early 2027. The BoC minutes are anticipated to highlight heightened uncertainty, more excess supply than previously projected, and less broad-based inflation pressures following the deceleration in CPI-trim/median. Analysts will be watching for discussions on risks to the near-term rate path and the persistence of higher energy prices [2].
Both central banks are responding to energy price shocks and sticky inflation, but their approaches differ: the BoE is expected to keep rates unchanged with inflation staying above target, while the BoC signals a dovish stance and an extended policy pause, looking through near-term inflation pressures. Market pricing reflects expectations for future easing, but central bank communications suggest caution and a focus on economic slack and disinflationary trends [1][2].
CONCLUSION
The Bank of England and Bank of Canada are both signaling extended holds on policy rates amid persistent inflation and energy price concerns. While markets anticipate some easing, central bank communications remain cautious, emphasizing economic slack and disinflation. Investors should monitor upcoming data and central bank statements for further guidance on rate trajectories.