"Instead, the BoE are expected to keep rates steady for the remainder of 2025 as inflation levels remain well above the 2% target. Nonetheless in a week that brings a raft of key data points out of the UK, the mix of higher claimants and falling core inflation could at least help push the narrative that the bank will need to become more accommodative if that trend persists. Today's meeting is instead likely to place greater emphasis on the bank's quantitative tightening programme."
"With the BoE having to rely more heavily on active gilt sales to achieve reductions to its balance sheet, expectations are that it will signal a significant slowdown in the pace of QT. For markets, a slower withdrawal of liquidity could ease some upward pressure on gilt yields, while also weighing on sterling if investors read it as a more dovish tilt in policy."
"Overnight data out of Australia saw a major miss in the jobs report, with the employment change figure falling to -5.4k despite expectations of a healthy 21.2k rise. This is the third hefty miss in the past four-month, highlighting the potential similarities to the US given that both still have relatively stable unemployment rates. This has led to AUD declines across most of the pairs this morning, with markets now expecting a rate cut from the RBA in November (61% chance)."
European equity markets opened higher while the FTSE 100 and 250 lag ahead of the Bank of England decision. The BoE is expected to keep interest rates unchanged through 2025 as inflation remains well above its 2% target, with the meeting likely to focus on quantitative tightening rather than additional rate moves. Market expectations point to a significant slowdown in the pace of gilt sales, which could ease upward pressure on gilt yields and weigh on sterling. In Asia-Pacific data, Australia reported a surprise jobs miss and the AUD weakened, while New Zealand GDP contracted sharply, pressuring the NZD.
Read at London Business News | Londonlovesbusiness.com
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