📝We Now Expect A BoE Rate Cut In Early 2026: Rabobank

 The Bank of England held Bank Rate at 4.00%, with a 7-2 vote split; Dhingra and Taylor favoured a 25bp cut, as expected.

 The annual pace of bond sales was reduced to £70 billion from £100 billion, though this implies an acceleration in active sales. To limit any disruption at the long end, the MPC

decided to sell fewer long gilts than other maturities.

 The MPC reaffirmed its “gradual and careful” approach to easing, contingent on sustained

disinflation. As progress looks to have stalled, the hurdle for further easing has risen.

 Skipping the November meeting would reinforce commitment to the 2% inflation target and signal a need for firmer progress on inflation. It also shifts focus to Chancellor Reeves ahead

of the Autumn Budget.

Accordingly, we now expect the next rate cut in early 2026, not Q4 2025. The MPC appears to be waiting for clearer disinflation signals, and skipping November would reinforce its commitment to the 2% target. Secondly, we had expected labour market softness to translate more directly into lower inflation. This has not materialised. As a result, we have revised up our forecast for the terminal rate to 3.50%, reflecting a more cautious and data-driven policy path ahead. - Rabobank