According to a Reuters poll conducted between August 13 and 18, the Bank of England (BoE) is widely expected to keep interest rates unchanged for the remainder of the year. Nearly 90% of economists surveyed, or 56 out of 64, anticipate that the BoE will maintain rates at 3.75% through the end of 2026, an increase from 83% in the previous month's poll. All respondents forecast no change at the central bank’s upcoming meeting in September [1].
The consensus among economists is that the BoE can afford to be patient, as the inflationary impact of higher oil prices remains modest, even though inflation continues to exceed the 2% target. The poll also revealed that a narrow majority of economists expect at least one rate cut by mid-2027, despite forecasts that inflation will remain above target until late next year [1].
Market attention is now focused on the upcoming UK inflation report for July, scheduled for release on Wednesday. Headline Consumer Price Index (CPI) inflation is expected to rise to 2.9% year-on-year from 2.6%, while core inflation is forecast to ease to 2.5% from 2.6% [1].
The BoE’s monetary policy decisions directly impact the Pound Sterling, as higher interest rates generally support the currency by attracting global investors, while lower rates or quantitative easing measures tend to weaken it [1].
CONCLUSION
The Reuters poll indicates strong consensus among economists that the Bank of England will keep rates steady through year-end, with no changes expected at the next meeting. While inflation remains above target, the BoE is seen as having room to be patient, and market participants are now watching the upcoming inflation data for further direction.