United Kingdom: Central Bank leaves rates unchanged in September
Latest bank decision: On 18 September, the Central Bank voted to keep the Bank Rate at 4.00%, following total cuts of 125 basis points since mid-2024.
Upside risks to prices drive hold: The Bank’s decision was underpinned by a desire to assess the impact of previous monetary easing before embarking on further rate cuts, in a context of currently elevated pay growth and headline inflation that is nearly double the 2.0% target.
More cuts likely to come: The Central Bank hinted it could cut rates further going forward, which is also the prevailing opinion among our panelists. Most panelists see 25 basis points of further cuts by end-2025, with a couple seeing room for a 50 basis-point cut and several forecasting no more cuts at all. Risks appear skewed towards no more cuts in 2025 due to persistent price pressures.
Panelist insight: On the outlook, ING analysts said:
“Services inflation should move lower from spring 2026, partly on account of much lower rental growth. Wage growth should fall much closer to 3.5% by year-end, judging by recent pay surveys. And importantly, the late-November budget is likely to raise taxes more significantly than it lifts spending, adding an extra headwind for 2026. […] We’re still narrowly favouring one more cut this year, though that’s a low conviction view. November looks fairly 50:50 to us right now and the data will decide one way or the other.”