BoE Policy Decision Seen on Hold, Messaging and Projections in Focus
- Vote split and dissenters to signal policy lean - Forecasts to show softer inflation, mixed growth outlook - Bailey expected to stress labour-market developments - Markets see low odds of March rate cut - Rate announcement due 12:00 GMT - Press conference scheduled for 12:30 GMT
LONDON – With little likelihood of a policy move from the Bank of England this week, investor attention will centre to the accompanying statement and updated economic forecasts.
The latest economist poll expects the Monetary Policy Committee to vote to keep the Base Rate unchanged at 3.75%, with the decision due at midday on Thursday.
How policymakers communicate their future intentions will be closely scrutinised. This may be reflected in the voting split, though analysts are divided on whether the outcome will be 6–3 or 7–2.
Morgan Stanley expects three dissenters – Swati Dhingra, Alan Taylor and Dave Ramsden – to vote for a 25bp cut. The bank said uncertainty around the meeting’s policy “lean” remains wide. “Our view is that the updated forecasts and limited near-term pricing of cuts will push Governor Andrew Bailey towards more labour-market-focused messaging,” analysts said.
Updated projections may also shed light on how policymakers assess near-term risks to the UK economy.
Updated economic outlook
The staff projections published in the quarterly Monetary Policy Report should provide a clearer picture of the bank’s thinking.
Deutsche Bank expects GDP forecasts to be trimmed slightly in the near term, but revised higher over the medium term, reflecting more supportive conditioning assumptions. “Labour-market projections are likely to show a somewhat higher peak in the unemployment rate, while private-sector wage growth is left largely intact,” said Sanjay Raja. “Inflation projections, we expect, will see a meaningful downward revision this year, with CPI landing at 2% by spring and remaining close to target over the forecast horizon.”
Central-bank watchers will also be alert to changes in the bank’s scenarios framework, and in particular whether two-sided risks continue to feature prominently in the MPC’s assessment.
Forward guidance
There is little expectation of any material change to the policy statement, with Bailey widely expected to stay on message.
“The MPC will likely stick to its guidance that Bank Rate remains on a ‘gradual downward path’, maintaining its easing bias,” Raja said. Policymakers are also expected to reiterate that “judgements around further policy easing will become a closer call”.
Market expectations
The retention of the recent missive should keep markets pricing in a continuation of the current easing cycle.
Morgan Stanley said it took theview that the updated forecasts and limited near-term pricing of cuts will push Governor Bailey towards a more labour market-focused messaging.“Opening up the next meeting a bit could then mean a March cut should the unemployment rate tick up further.”
Currently, rates markets are pricing in less than a 20% probability of a cut at the 19 March meeting.
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- Vote split and dissenters to signal policy lean
- Forecasts to show softer inflation, mixed growth outlook
- Bailey expected to stress labour-market developments
- Markets see low odds of March rate cut
- Rate announcement due 12:00 GMT
- Press conference scheduled for 12:30 GMT
By Harry Daniels
LiveSquawk News
@HarryDaniels71
3 February 2026 | 15:30 GMT
LONDON – With little likelihood of a policy move from the Bank of England this week, investor attention will centre to the accompanying statement and updated economic forecasts.
The latest economist poll expects the Monetary Policy Committee to vote to keep the Base Rate unchanged at 3.75%, with the decision due at midday on Thursday.
How policymakers communicate their future intentions will be closely scrutinised. This may be reflected in the voting split, though analysts are divided on whether the outcome will be 6–3 or 7–2.
Morgan Stanley expects three dissenters – Swati Dhingra, Alan Taylor and Dave Ramsden – to vote for a 25bp cut. The bank said uncertainty around the meeting’s policy “lean” remains wide. “Our view is that the updated forecasts and limited near-term pricing of cuts will push Governor Andrew Bailey towards more labour-market-focused messaging,” analysts said.
Updated projections may also shed light on how policymakers assess near-term risks to the UK economy.
The staff projections published in the quarterly Monetary Policy Report should provide a clearer picture of the bank’s thinking.
Deutsche Bank expects GDP forecasts to be trimmed slightly in the near term, but revised higher over the medium term, reflecting more supportive conditioning assumptions. “Labour-market projections are likely to show a somewhat higher peak in the unemployment rate, while private-sector wage growth is left largely intact,” said Sanjay Raja. “Inflation projections, we expect, will see a meaningful downward revision this year, with CPI landing at 2% by spring and remaining close to target over the forecast horizon.”
Central-bank watchers will also be alert to changes in the bank’s scenarios framework, and in particular whether two-sided risks continue to feature prominently in the MPC’s assessment.
There is little expectation of any material change to the policy statement, with Bailey widely expected to stay on message.
“The MPC will likely stick to its guidance that Bank Rate remains on a ‘gradual downward path’, maintaining its easing bias,” Raja said. Policymakers are also expected to reiterate that “judgements around further policy easing will become a closer call”.
The retention of the recent missive should keep markets pricing in a continuation of the current easing cycle.
Morgan Stanley said it took the view that the updated forecasts and limited near-term pricing of cuts will push Governor Bailey towards a more labour market-focused messaging. “Opening up the next meeting a bit could then mean a March cut should the unemployment rate tick up further.”
Currently, rates markets are pricing in less than a 20% probability of a cut at the 19 March meeting.