BoE Stance on Interest Rates Awaited Amid QT Decisions

The Bank of England is expected to hold interest rates steady at 5.0% in its upcoming September meeting. Investors are keenly watching for clues regarding future interest rate cuts and decisions on its quantitative tightening (QT) program. Concerns over inflation, wage growth, and economic growth are influencing these financial decisions.

Investors are closely monitoring the Bank of England's upcoming September meeting, where it is expected to hold interest rates at 5.0%. All 65 economists in a Reuters poll predict that the BoE will not make any changes following the rate cut from 5.25% in August.

Despite mixed signals regarding price pressures, wage growth has cooled as anticipated. However, upcoming inflation data may still exceed the central bank's 2% target. Markets estimate a one-in-five chance for an interest rate cut next week, fully pricing in a 0.25 percentage point reduction by November.

Bond investors are also highly anticipating the BoE's decision on the pace of its quantitative tightening (QT) program, which involves reversing substantial government bond purchases. The MPC's decision on the QT pace could significantly impact both the economy and the state budget, with finance minister Rachel Reeves showing particular interest as she prepares for her inaugural budget.

(With inputs from agencies.)