Bank of England Rates Decision: What to Expect on…

• UK economic data is weak.

The Bank of England’s next monetary policy decision is due at midday on Thursday, June 19 and financial markets, as indicated by overnight index swaps, are forecasting interest rates will be held at 4.25%, following the quarter-point cut in May. FactSet consensus data also predicts the Bank will hold rates steady at 4.25%, for now.

August 2025 Bank Meeting in View

Swaps data suggests the next likely rate cut will be in August and then again November, in keeping with the quarterly cadence of previous rate reductions. These meetings will also see the publication of the monetary policy reports.

The Bank of England has an unusually large number of variables to consider when making its monetary policy decision: the likely impact of tariffs on the UK economy, which contracted in April, rising risk of conflict in the Middle East, a surge in sterling against the dollar, softening domestic wage growth, and the implications of the chancellor’s latest multi-billion pound spending plans.

One of the biggest current concerns is domestic inflation. The latest inflation data for April showed a large rise in annual CPI to 3.4% as energy costs soared, far in excess of the Bank’s official 2% target. The next data, for May, will be released on June 18, the day the Bank begins its two-day meeting. Current FactSet consensus has the CPI rate remaining at 3.4%. But the Bank’s own forecasts have CPI rising to 3.7% in the coming months before falling back to the 2% target in early 2026.

When Are the Bank of England’s Next Rate Decisions?

• June 19

• Aug. 7

• Sep. 18

• Nov. 6

• Dec. 18

In May, the Bank’s monetary policy committee voted by a majority of five to four to reduce the headline interest rate to 4.25%. Two members voted to reduce by 0.5 percentage points to 4%, while two members preferred to maintain base rate at 4.5%. One of those members voting for a half-point cut was Alan Taylor, who recently told UK media he is concerned about the deteriorating UK economy and is advocating for deeper cuts ahead of market expectations.

Since Aug. 2024, the Bank has cut interest rates four times to 4.25%. Rates hit a peak of 5.25% during a period of double-digit inflation, rising sharply from a record low 0.10% in late 2021.

Where Next for UK Interest Rates?

Other analysts and economists are more cautious. Grant Slade, Morningstar’s international economist, argues that elevated wage and services inflation will be making policymakers cautious and unlikely to cut rates in the coming months.

Ahead of the June 19 decision, JP Morgan Asset Management’s global market analyst Zara Noakes said: “One would expect price pressures to dissipate as the labour market falters, but until there is clear evidence of cooling inflation in the hard data, the Bank should stay firmly on hold.”

After last month’s rate decision, George Brown, senior economist at Schroders, said: “Going forward, the Bank of England has far less scope to cut rates than the market currently expects.”

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