Finance
Morning Bid: Split Bank of England set to cut rates
Published by Global Banking and Finance Review
Posted on August 7, 2025
3 min readLast updated: January 22, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on August 7, 2025
3 min readLast updated: January 22, 2026
The Bank of England is expected to cut rates today amid inflation concerns, with potential board division. Global markets watch closely.
A look at the day ahead in European and global markets from Kevin Buckland
There's little doubt in the market's mind that the Bank of England will cut interest rates later today by another quarter point, making it five cuts in the past year.
But a tricky balance between a slowing jobs market and nagging inflation worries could see the board split three ways, with two of the nine members potentially pushing for no change, while two others may lobby for a half-point reduction.
The board's language will also be key, with a focus on whether the message of "gradual and careful" policy easing remains in place.
Any signs of an extended pause would be a blow for Finance Minister Rachel Reeves and Prime Minister Keir Starmer, who have promised to speed up Britain's slow economic growth.
Away from the UK, the market's broad focus falls squarely on another central bank with some similar problems.
The U.S. Federal Reserve has seen the macroeconomic data take a distinct downward turn over the past week - particularly the labour market - just days after the board opted to forgo a rate cut.
But with worries about simmering inflationary forces as a result of President Donald Trump's bellicose tariff campaign also showing up in the data, Fed Chair Jerome Powell's wait-and-see stance also finds some support.
Hanging over the Fed's debate - which saw two Trump-chosen Fed governors dissent in last week's decision - are the president's persistent and aggressive calls to cut rates, often framed with name-calling and threats to fire Powell before his chairmanship expires in May.
The market's eyes are on Trump's short list of four possible replacements, and more immediately, his pick to fill a governor role abruptly vacated by Adriana Kugler.
Meanwhile, Trump's barrage of tariff threats continues unabated, with a 100% duty on semiconductor imports and additional levies on India for importing Russian oil among the latest.
Trump plans to talk to Russian President Vladimir Putin next week about ending the war in Ukraine, which is buoying the euro while injecting uncertainty into the outlook for crude oil.
Overall though, the market has become more inured to the constant tariff sabre-rattling and Japan's Topix index marched to a record peak while tech-heavy Taiwan shares leapt more than 2% to the highest in over a year.
Pan-European STOXX 50 futures are pointing 0.2% higher, with Wall Street futures also up by about the same amount.
A strong U.S. earnings season is one reason for that. Coming up are Eli Lilly, ConocoPhillips and Warner Bros Discovery, among many others.
Europe has a busy day of earnings reports as well, with Allianz, Siemens and Merck among them.
On the data front, Germany has trade figures and industrial production numbers, while Britain gets a reading on house prices.
Key developments that could influence markets on Thursday:
-BoE policy decision
-UK Halifax house prices (July)
-German exports, imports, industrial production (all June)
Trying to keep up with the latest tariff news?
Our new daily news digest offers a rundown of the top market-moving headlines impacting global trade. Sign up for Tariff Watch here.
(Reporting by Kevin Buckland; Editing by Sam Holmes)
The market anticipates that the Bank of England will cut interest rates by another quarter point, marking the fifth cut in the past year.
The decision is influenced by a slowing jobs market and ongoing inflation concerns, which could lead to a split among board members.
Any indication of an extended pause in rate cuts would be detrimental to Finance Minister Rachel Reeves and Prime Minister Keir Starmer, who aim to accelerate economic growth.
The focus on the Bank of England's decision comes amidst similar challenges faced by the U.S. Federal Reserve, particularly regarding inflation and labor market data.
On the same day, the UK will release Halifax house prices, while Germany will provide trade figures and industrial production numbers.
Explore more articles in the Finance category
