BoE Set To Deliver ‘Active Hold’ As Rate Path Is Reevaluated
- BoE seen holding at 3.75% in a likely 7-2 vote split
- Hawks warn of second-round energy inflation risks
- Softer GDP, labour data reduce pressure for immediate action
- Persistent inflation risks persist July rate move remains possible
- Decision due Thursday, at 11:00 GMT
By Harry Daniels/Evie Cummins
LiveSquawk News
13:00 GMT | 17 Jun 2026
LONDON – Following its two-day meeting, the Bank of England’s Monetary Policy Committee is widely expected to vote 7-2 in favour of keeping the Bank Rate unchanged at 3.75%, when it announces its decision at midday on Thursday.
Rate setters Megan Greene and Huw Pill are expected to dissent in favour of a hike, although there is an outlying possibility decision could be more contentious should Catherine Mann or Clare Lombardelli join the hawks.
Analysts at Société Générale described the likely outcome as an “active hold”, positing that policymakers sought to dampen expectations of near-term cuts rather than signal an outright tightening bias.
Market pricing points to no move until at least July next year, though further hikes cannot be ruled out if the Strait of Hormuz remains disrupted or clearer signs of domestic inflation persistence emerge.
Greene’s hawkish stance reflected certain scenarios outlined within the April Monetary Policy Report, which assessed the potential economic fallout from the energy shock triggered by the US-Iran conflict. She argued that current second-round inflation effects sat somewhere between scenario B (modest) and scenario C (severe), strengthening the case for tighter policy.
Of course, Greene comments preceded weekend events. The likelihood of a 60-day ceasefire agreement expected to be signed on Friday, may yet limit the scale of highlighted spillover effects. The bank’s chief economist Pill has expressed a similar concern, drawing parallels to the 2022 energy shock and warning that businesses and consumers may now be more sensitive to inflation after the third major energy shock in six years.
Evaluation of Data
Central bank watchers anticipated that forward guidance would likely remain largely unchanged, retaining cautious, data-dependent and non-committal phraseology.
Nomura said the MPC would likely repeat its previous guidance that it “stands ready to act as necessary” to ensure inflation returns sustainably to target. Whilst, Deutsche Bank’s Sanjay Raja said the statement could take on a more hawkish tone, with “some language linking the protracted duration of the energy shock to rising risks of indirect and second-round effects.” Although this is viewed as a lower-probability outcome.
In terms of how the economy has fared since the last meeting, UK GDP contracted 0.1% m/m in April, driven by a 0.5% fall in consumer-facing services, following stronger-than-expected growth earlier in the year.
The labour market data has also turned down, with the latest payrolls data showing a 100,000 decline in employment. With the unemployment rate rising to 5.0% in April. BofA’s Sonali Punhani said the softer labour backdrop should reduce the urgency for the BoE to act, while adding that next week’s data will be critical if volatility persists.
All the while, the construction sector remained under significant strain. The sector’s PMI fell to 38.2 in May from 39.7 in April, marking its sharpest contraction since May 2020. Tim Moore, director of economic indices at S&P Global Market Intelligence said the weakness reflected “rapid increases in prices for energy-intensive raw materials” and purchasing costs rising “to the greatest extent since June 2022.”
Looking Ahead
Some economists still forecast scope for a 25-basis point hike at the July meeting, though the probability of that outcome has diminished as the prospect of an end to the US-Iran conflict has improved. Even so, incoming data over the coming weeks will be critical in assessing the scale of second-round energy effects and shaping the near-term policy outlook.
Overall, the decision is unlikely to surprise markets. Attention during the day may also be drawn to the Makerfield by-election, which could compete for domestic headlines.
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- BoE seen holding at 3.75% in a likely 7-2 vote split
- Hawks warn of second-round energy inflation risks
- Softer GDP, labour data reduce pressure for immediate action
- Persistent inflation risks persist July rate move remains possible
- Decision due Thursday, at 11:00 GMT
By Harry Daniels/Evie Cummins
LiveSquawk News
13:00 GMT | 17 Jun 2026
LONDON – Following its two-day meeting, the Bank of England’s Monetary Policy Committee is widely expected to vote 7-2 in favour of keeping the Bank Rate unchanged at 3.75%, when it announces its decision at midday on Thursday.
Rate setters Megan Greene and Huw Pill are expected to dissent in favour of a hike, although there is an outlying possibility decision could be more contentious should Catherine Mann or Clare Lombardelli join the hawks.
Analysts at Société Générale described the likely outcome as an “active hold”, positing that policymakers sought to dampen expectations of near-term cuts rather than signal an outright tightening bias.
Market pricing points to no move until at least July next year, though further hikes cannot be ruled out if the Strait of Hormuz remains disrupted or clearer signs of domestic inflation persistence emerge.
Greene’s hawkish stance reflected certain scenarios outlined within the April Monetary Policy Report, which assessed the potential economic fallout from the energy shock triggered by the US-Iran conflict. She argued that current second-round inflation effects sat somewhere between scenario B (modest) and scenario C (severe), strengthening the case for tighter policy.
Of course, Greene comments preceded weekend events. The likelihood of a 60-day ceasefire agreement expected to be signed on Friday, may yet limit the scale of highlighted spillover effects. The bank’s chief economist Pill has expressed a similar concern, drawing parallels to the 2022 energy shock and warning that businesses and consumers may now be more sensitive to inflation after the third major energy shock in six years.
Central bank watchers anticipated that forward guidance would likely remain largely unchanged, retaining cautious, data-dependent and non-committal phraseology.
Nomura said the MPC would likely repeat its previous guidance that it “stands ready to act as necessary” to ensure inflation returns sustainably to target. Whilst, Deutsche Bank’s Sanjay Raja said the statement could take on a more hawkish tone, with “some language linking the protracted duration of the energy shock to rising risks of indirect and second-round effects.” Although this is viewed as a lower-probability outcome.
In terms of how the economy has fared since the last meeting, UK GDP contracted 0.1% m/m in April, driven by a 0.5% fall in consumer-facing services, following stronger-than-expected growth earlier in the year.
The labour market data has also turned down, with the latest payrolls data showing a 100,000 decline in employment. With the unemployment rate rising to 5.0% in April. BofA’s Sonali Punhani said the softer labour backdrop should reduce the urgency for the BoE to act, while adding that next week’s data will be critical if volatility persists.
All the while, the construction sector remained under significant strain. The sector’s PMI fell to 38.2 in May from 39.7 in April, marking its sharpest contraction since May 2020. Tim Moore, director of economic indices at S&P Global Market Intelligence said the weakness reflected “rapid increases in prices for energy-intensive raw materials” and purchasing costs rising “to the greatest extent since June 2022.”
Some economists still forecast scope for a 25-basis point hike at the July meeting, though the probability of that outcome has diminished as the prospect of an end to the US-Iran conflict has improved. Even so, incoming data over the coming weeks will be critical in assessing the scale of second-round energy effects and shaping the near-term policy outlook.
Overall, the decision is unlikely to surprise markets. Attention during the day may also be drawn to the Makerfield by-election, which could compete for domestic headlines.