BoE Expected to Hold Interest Rates Steady Despite Rising Inflation Concerns

The Bank of England is set to keep interest rates steady at its upcoming monetary policy meeting on Thursday, despite inflation figures exceeding its 2% target. According to market participants, there's an over 80% probability that the bank will not adjust rates during this meeting.

However, expectations are building for a likely interest rate increase of at least 25 basis points in November. This decision would position the Bank of England against the backdrop of tightening monetary policies adopted by other major central banks.

The U.S. Federal Reserve recently raised interest rates by a quarter-point, marking its first rate hike since 2023, while the European Central Bank executed its second rate increase of the year. The Bank of Japan is also expected to adjust its key interest rate by the end of its two-day meeting on Friday.

Recent data highlighted a notable spike in the U.K.'s inflation rate, which climbed to 3.1% in August, the first instance of inflation exceeding 3% since March. The Office for National Statistics attributed this increase mainly to surging motor fuel costs, which have risen by 23% year-on-year.