The Bank of England is widely expected to keep its key interest rate unchanged at 4% on September 18, according to a Reuters poll. Most economists still forecast a quarter-point cut in Q4 and another early next year, though a growing minority believe the BoE may refrain from easing further in 2025. Inflation, which peaked above 11% nearly three years ago and briefly returned to target last year, has since risen again and is projected to reach 4% in September, with a return to 2% not expected until mid-2027.
All 67 economists surveyed agreed on a September hold,
- 42 anticipating a Q4 cut,
- three seeing a 50 bp move,
- and 22 (about one-third) predicting no cuts for the rest of the year.
Analysts stressed upcoming inflation and labour data due September 16–17 will be crucial for shaping November’s decision. Wage growth remains elevated at 5%, while inflation is seen averaging 3.8% this quarter and 3.6% in Q4.
- Some economists argue inflation’s persistence makes further cuts too risky, warning of drifting expectations.
- Others believe easing in November is still likely if data softens.
The UK economy is expected to grow modestly at 0.2–0.4% q/q through 2026, with annual growth averaging just above 1%. Meanwhile, the BoE continues shrinking its balance sheet, with economists forecasting a further £50–100bn reduction in bond holdings over the next year.
