BoE Holds Fire on Rates, Slows Bond Portfolio Unwind Amid Oil Price Spikes

The Bank of England (BoE) is set to keep interest rates steady this week despite rising oil prices, but it will slow the pace at which it unwinds its government bond portfolio.

According to economists polled by Reuters, all predicted that the BoE would hold rates steady in September. However, some analysts are having doubts about a surprise 25 basis-point rate hike due to the speed and rhetoric of recent central bank actions.

Financial markets have priced in a 30% chance of a quarter-point rate hike on September 17, up from less than 10% at the start of last week. BoE Governor Andrew Bailey stressed that he wants clearer signs of sustained above-target medium-term inflation before backing a rate rise.