BOE set to hold rates as UK budget looms over decision

LONDON: The Bank of England is expected to hold interest rates steady on Thursday, likely interrupting its once-a-quarter pace of policy easing maintained for more than a year.

Economists and investors widely anticipate the Monetary Policy Committee will keep the benchmark rate at 4%, with UK inflation still running at nearly twice the 2% target and the autumn budget due Nov. 26.

A hold would break the pattern of alternating rate cuts since August 2024 and contrast with the Federal Reserve, which eased again on Wednesday. Still, traders see the pause as temporary, betting on a December cut following weaker readings on inflation, jobs and output. Market pricing suggests almost a 60% probability of a reduction on Dec. 18.

Governor Andrew Bailey has cautioned that the timing of the next cut remains uncertain, especially with Chancellor Rachel Reeves set to unveil her budget in three weeks. Reeves, criticized for fueling food-cost pressures with April's payroll tax hike, faces pressure to avoid further measures that could weigh on an already fragile economy.

US and Canada
Federal Reserve Chair Jerome Powell warned against assuming another December cut, while several Fed officials - including Lisa Cook, Alberto Musalem, John Williams, and Stephen Miran - are set to speak next week, offering fresh views on growth and inflation.

With official data still delayed by the month-long government shutdown, private-sector reports will fill the gap. ADP data due Wednesday may show a modest gain in private payrolls after two months of declines, followed Thursday by Challenger job-cut figures after recent layoffs at Amazon and UPS.