Major houses expect the Bank of England to hold rates tonight in a 'hawkish
pause', with vote splits likely around 6-3; rising energy prices are the main
risk to that call. BNP Paribas now forecasts a 25bp hike in November (previously
September). Refinitiv survey: economists expect a September hold and see cuts,
not hikes, as more likely next year. Evercore ISI warns rates markets price
roughly 4.5 hikes next year while the BOE remains reluctant to tighten. Goldman
says market pricing is too hawkish and expects rates unchanged through the rest
of 2026, with cuts beginning in 2027. Citigroup now expects 25bp moves in Q4
2026 and Q1 2027 (previously saw unchanged policy to Q2 2027). JP Morgan expects
a hold tonight to avoid reinforcing rapid-tightening bets but flags a possible
November hike if energy-driven inflation peaks around 3.9% in Feb. Franklin
Templeton views gilts as attractive given a cooling labor market and softer
growth, implying policy may be looser than markets price. HSBC sees no clear
evidence of changed MPC voting intentions and expectations the hold faction to remain
the majority. ING expects a 6-3 hold at 3.75% on Sep.17 and two cuts next year
(Apr and Nov) though timing could slip; it also expects quantitative tightening
to slow to about £50bln over the next 12 months from £70bln last year. Danske's
base case is no rate change until Q2 2027 before cuts resume, but it notes
persistent high energy prices and resilient activity could still force hikes
even without broad-based inflation. Oxford Economics judges second-round
inflation risks limited, leaving room to hold; it expects a minority of hawks to
push for hikes while most MPC members remain patient.
