BoE Holds Rates Amid Rising Inflation Concerns

The Bank of England (BoE) has maintained its Bank Rate at 3.75%, despite a challenging inflation backdrop, according to OCBC strategist Christopher Wong.

CPI is expected to rise to around 3.75% in Q4 and slightly above 4% in early 2027, largely due to higher energy prices, but the BoE notes that there has been little evidence of material second-round effects in wages and prices.

The British Pound (GBP) weakened as gilts rallied on a QT overhaul, with 30y yields falling around 12bp. Wong sees limited support from already-priced tightening and focuses on wage and price dynamics.