London – A fresh Reuters poll of 65 leading economists suggests the Bank of England will maintain its Bank Rate at 3.75% for the rest of this year and well into 2027. The consensus reflects confidence that inflation, currently at 2.9%, remains below the level that would compel policymakers to raise borrowing costs.
Poll Details and Market Expectations
The survey, conducted between September 4 and 8, found that nearly 90% of respondents expect rates to stay unchanged through the end of 2026. Only eight economists anticipate a modest rise to 4.00% by year‑end. Financial markets, however, are pricing in three quarter‑point hikes through mid‑2027, beginning in November.
Economists note that higher energy prices linked to the ongoing U.S.–Israeli conflict with Iran have not yet filtered into broader inflation. Brent crude futures are again approaching the $100‑a‑barrel mark, but the impact on consumer prices appears muted, allowing the Bank to exercise patience.
Analyst Commentary
“For the Bank, there are no flashing warning signs,” said Gabriella Willis, UK economist at Santander CIB. She added that the absence of clear second‑round effects – such as wage‑price spirals – supports a hold stance.
Elizabeth Martins, UK economist at HSBC, echoed this view, noting that the next inflation and labour‑market data releases are unlikely to shift the Monetary Policy Committee’s (MPC) current consensus. “We don’t think conditions have been met for a change at the September meeting,” she wrote.
Future Outlook
The median forecast now points to the first rate cut not arriving until the third quarter of 2027, a delay from the August poll’s earlier expectations. James Moberly, senior UK economist at Goldman Sachs, projects inflation peaking at 3.3% in November – higher than the BoE’s own estimate – but still below the threshold that would trigger aggressive policy moves.
Inflation is expected to average 3.1% in 2026, then ease to 2.5% in 2027 and 1.9% in 2028. Economic growth forecasts remain modest, with 1.1% growth projected for 2026 and 1.2% for 2027, before picking up to 1.5% in 2028.
Implications for Borrowers and Investors
A sharp rise in global bond yields has tightened overall financial conditions, raising concerns about higher mortgage rates. Nonetheless, the BoE’s steady‑hand approach gives households and businesses breathing room to plan ahead without the shock of sudden rate hikes.
While some market participants remain wary of potential upside risks, the prevailing view among surveyed economists is that the Bank’s current policy stance is appropriate given the data. The next MPC meeting on September 17 is expected to reaffirm the hold, with any shift likely postponed until later in the next year.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
