BoE to Maintain Interest Rates Amid Inflation Concerns and Bond Sales Focus

The Bank of England is expected to keep interest rates steady as it monitors inflation risks and shifts its focus to bond sales. Financial markets and economists anticipate a cautious approach from the BoE's Monetary Policy Committee. Meanwhile, Finance Minister Rachel Reeves is watching closely as this might impact her upcoming budget.

The Bank of England is poised to hold interest rates steady this Thursday, awaiting signs that inflation risks have been mitigated. The central bank's focus now shifts to its bond sale strategy, which could influence Finance Minister Rachel Reeves' inaugural budget this October.

Despite British inflation holding steady in August, it accelerated in the services sector, a key concern for the BoE. As a result, forecasters predict that interest rates in the UK will decline more slowly compared to the United States and the euro zone. In contrast, the Federal Reserve implemented a notable half-percentage-point rate cut, reflecting increasing optimism about inflation, according to Fed Chair Jerome Powell.

Economists and financial markets expect a cautious stance from the BoE's Monetary Policy Committee this week. All 65 economists in a Reuters poll indicated that the Committee would likely keep rates at 5.0%, maintaining the current rate after a slight drop in August. Bond investors are also attentively watching Thursday's announcement regarding the BoE's quantitative tightening programme, which involves selling off government bonds.

(With inputs from agencies.)