The Bank of England is likely to hold interest rates at 4% this week, ending its pattern of quarterly cuts and signalling a more measured phase in its policy approach, predicts the CEO of one the world’s largest independent financial advisory organizations.
The decision will be closely followed by investors in the UK and internationally as markets weigh how long rates will stay on hold.
Nigel Green, CEO of deVere Group, says: “We expect the Bank of England to keep rates unchanged this week. Inflation is easing but remains above target, and the Bank will want to see the government’s fiscal plans before committing to another cut.”
The pause would mark the first time since the easing cycle began last year that the Monetary Policy Committee has chosen not to reduce borrowing costs.
Inflation has fallen more quickly than expected in recent months, but it is still nearly double the Bank’s 2% goal. At the same time, growth remains weak and households face tighter conditions ahead of the Budget later this month.
The deVere chief says: “The data has become more balanced. Price pressures are cooling, but demand is softening. Policymakers are likely to wait for greater clarity before adjusting further. Holding steady gives them more control at a critical point in the economic cycle.”
Markets have already adjusted to the possibility of a pause. The pound has been stable against major currencies, while gilt yields have steadied at around 4.2% as traders moderate expectations for near-term cuts.
Nigel Green says: “The gilt market is signalling that investors now expect a longer hold period. For many, this creates opportunities.
“UK government bonds offer solid yield and relative safety, particularly if inflation continues to drift lower in the coming months.”
He adds that while the pause could cool expectations in the equity market, it should underpin confidence in the Bank’s approach.
“A central bank that avoids rushing decisions provides stability. Investors value predictability, and this hold will be seen as a sign that the Bank is managing policy carefully.”
The decision will also carry international implications. Other major central banks, including the US Federal Reserve and the European Central Bank, have recently struck a similar tone, emphasising the need for patience. The Bank of England’s move would reinforce that global trend.
Nigel Green says: “This convergence among major central banks helps limit volatility in global markets. Currency stability improves when policy direction is broadly aligned.
“This is positive for investors with internationally diversified portfolios – something all portfolios should be.”
He notes that a cautious stance from the Bank could help sustain the pound’s resilience and strengthen confidence among overseas investors.
“Foreign capital tends to favour economies where monetary and fiscal policy appear coordinated and steady. The Bank’s decision to wait until after the Budget will be interpreted as a sign of discipline.”
The broader context also matters. Inflation at 3.8% is lower than expected, and wage growth has cooled to its slowest pace in three years. The Bank will want to be certain that these improvements are lasting before cutting again.
Nigel Green says: “The overall direction remains towards lower rates, but the path is now more data-dependent. Investors should expect the next move to come in early 2026, once the Bank has seen clear confirmation that inflation is on course to meet target.”
He concludes: “A hold this week would not surprise the markets, but it will still be important.
“It would confirm that the Bank of England intends to maintain policy discipline while it assesses fiscal conditions and inflation dynamics.
“For investors, that means a steadier environment for gilts, a firmer pound, and better visibility as we head into next year.”
