Published by Global Banking and Finance Review
Posted on October 28, 2025
3 min readLast updated: January 21, 2026
The Bank of England is expected to hold interest rates at 4.00% this quarter, with potential cuts by early 2026. Economists foresee no policy easing this year.
By Indradip Ghosh
BENGALURU (Reuters) -The Bank of England will keep interest rates at 4.00% at its November meeting, and a small majority of economists polled by Reuters now expect no further policy easing this year.
If correct, that would break a long streak of once-per-quarter 25-basis-point rate cuts, just ahead of a key government budget on November 26 that will most likely raise taxes.
A majority of economists still expect two more rate cuts by the middle of next year.
UK consumer inflation was 3.8% in September, nearly double the BoE's 2% target, but economists expect it to decline over the coming year.
About 87% of respondents, 53 of 61, in the October 22 to 28 poll forecast the BoE would hold its Bank Rate at 4.00% on November 6. The central bank has cut rates by 125 basis points since August 2024.
Just over half, 34 of 63, expected the Bank Rate to remain steady this year, a shift from last month's survey when nearly 70% anticipated at least one reduction this quarter. The remaining 29 predicted one cut by December.
Interest rate futures now imply around a 58% probability of at least one cut by December, down from 75% last week.
Slightly over half of economists, 35 of 63, forecast the Bank Rate at 3.75% by the end of March 2026. More than 60% expect the rate at 3.50% in the second quarter.
"We've pushed back our rate cut call from November to February, but the data we've had over the last week or so does raise the question of whether we could get a cut in December. It comes down to the data we get between now and then, but also the budget and whether or not there are any surprises," said James Smith, developed markets economist at ING.
"The budget should be quite helpful for the BoE. Tax hikes dominate, and despite political pressure, the government will be trying its hardest not to increase spending materially on top of what was already planned. If that happens, then the December cut may come back into play."
Finance minister Rachel Reeves will likely increase taxes in her budget to signal she remains on course to meet her fiscal targets.
Inflation will average 3.6% this quarter before sliding to 2.3% by end-2026, poll medians showed.
"We are fairly certain inflation will fall next year," said Investec economist Ellie Henderson. "If you also put on top the weaker labour market, which we hope will bear down on services inflation, we think inflation will start to fall at the turn of the year, and that will give the BoE the comfort they need to cut rates further."
The unemployment rate, its highest in more than four years at 4.8% in August, is expected to rise to 4.9% this quarter and average around there for the next few quarters.
Britain's economy is forecast to grow 0.2% to 0.4% per quarter through 2026 and average 1.4% this year and 1.2% next, broadly unchanged from last month.
(Other stories from the Reuters global economic poll)
(Reporting by Indradip Ghosh. Additional reporting by Shaloo Shrivastava. Polling by Mumal Rathore and Aman Kumar Soni. Editing by Ross Finley and Mark Potter)
The Bank of England is the central bank of the United Kingdom, responsible for issuing currency, maintaining monetary stability, and overseeing the financial system.
Interest rates are the cost of borrowing money, expressed as a percentage of the amount borrowed. They influence economic activity and inflation.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured annually.
Monetary policy refers to the actions taken by a central bank to manage the money supply and interest rates to achieve macroeconomic objectives like controlling inflation.
A rate cut is a reduction in the interest rate set by a central bank, intended to stimulate economic activity by making borrowing cheaper.
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