BoE Holds Firm on Interest Rates Amid Modest Inflationary Pressure

The Bank of England (BoE) is expected to hold interest rates steady through the end of this year, according to a recent Reuters poll. Nearly 90% of economists surveyed, or 56 out of 64, predict that the BoE will maintain its current rate of 3.75%. This marks an increase from last month's forecast, where 83% expected no change.

The economists attribute their prediction to the modest inflationary impact of higher oil prices, despite inflation remaining above the 2% target. They also anticipate that at least one rate cut will occur by mid-2027, even though inflation is forecast to stay above target until late next year.

The upcoming UK inflation report for July, due on Wednesday, is expected to show a rise in headline Consumer Price Index (CPI) inflation to 2.9% YoY from 2.6%. Core inflation is predicted to ease to 2.5% from 2.6%.