BOE Holds Rates Amid Inflation Fears and Weakening Labour Market

The Bank of England is expected to hold its interest rate at 3.75% when it meets on July 6-7, despite rising inflation concerns.

August's consumer price index (CPI) rose to 3.1% year-on-year, while producer-price inflation accelerated, highlighting persistent pipeline pressures.

However, the Bank is likely to retain a hawkish bias due to increased energy prices, which may embed themselves in domestic inflation at some point.

The Monetary Policy Committee (MPC) is expected to slow quantitative tightening from £70 billion to around £50 billion over the next year and keep active sales near £20 billion, excluding long-dated bonds.