BOE Expected to Hold Rates as UK Economy Remains Resilient

The Bank of England is expected to keep interest rates unchanged at 3.75% for the remainder of the year, according to a Reuters poll. Despite inflation risks, nearly 90% of economists polled believe the Monetary Policy Committee will not raise rates, with only six forecasting a hike and two expecting a cut.

The UK economy has shown resilience since the US-Israeli war on Iran began in late February, with little evidence of energy price spillover into the broader economy. However, inflation rose to 2.9% in July from 2.6% in June, further above the Bank's 2% target.

Elizabeth Martins, UK economist at HSBC, noted that a big rebound in energy prices would change things, while Bruna Skarica, chief UK economist at Morgan Stanley, said the labour market data was likely to keep policymakers on the sidelines for now. The economists expect at least one rate cut by mid-2027.