Market expects BOE to keep current bank rate, with potential dissenters shaping future decisions

    by VT Markets
    /
    Jun 19, 2025
    The central bank is expected to maintain the bank rate at 4.25%. Market predictions show a 94% chance of this decision. Recent UK CPI reports from April and May suggest there won’t be any surprises concerning the rate. Vote forecasts indicate a 7-2 split in favor of keeping the current rate, with Dhingra and Taylor likely pushing for a rate cut. Barclays and Morgan Stanley predict a possible third dissenting vote from Ramsden or Breeden.

    Rate Cut Odds

    A rate cut is not expected until September. The central bank will likely use consistent language, continuing its careful approach to rate assessments, similar to the announcement made in May. Many analysts, including those from BofA, Citi, Deutsche Bank, Goldman Sachs, JP Morgan, Morgan Stanley, and TD Securities, predict the next rate cut will occur in August. Barclays suggests today’s meeting could be notable, with “the risk of three more internal votes for a cut to 4.00%.” If this occurs, Barclays foresees consecutive cuts, reducing the rate to 3.50%. The central bank seems in no hurry to change rates. Communication remains cautious, and while the Bank Rate stays at 4.25%, there are subtle changes occurring. April and May’s inflation figures didn’t create panic or celebration but were enough to justify keeping the current rate. The market expects the current policy will remain unchanged for now. With a 94% probability, this comes close to certainty. This situation reflects a prevailing sentiment toward stability over the next few weeks and likely into late summer.

    Voting Patterns and Market Sentiment

    The anticipated 7-2 voting split mirrors previous patterns. Dhingra and Taylor, who have persistently favored lower rates, are expected to vote the same way again. The interesting development is the potential for a third voter to join them, possibly Ramsden or Breeden, which could lead to changes. If a third member votes for a cut, it might not immediately affect rate cut odds, but it could raise expectations for an earlier decision. August stands out as a key month, marked by several analysts as a crucial point. Major banks like Deutsche, Citi, and Goldman are increasingly confident about this. Barclays has pointed out that this meeting could produce unexpected results, not in the decision but in the vote. If three members support a cut, this would create pressure for change. Barclays even hints at the possibility of consecutive rate cuts, bringing the benchmark down to 3.50%, suggesting a more significant shift than currently anticipated. The central bank’s language remains steady, cautious, and deliberate, reflecting the tone set in May. The committee is focused on data but is hesitant to act on inflation until necessary. However, if internal dissent grows, the board’s stance may shift. Changes in member sentiment can have significant implications. Our emphasis is less on the current rate and more on shifts in voting patterns. These subtleties influence entry points in metric-based trading. If three members push for an easing, it could impact near-term risk premiums and change our curve structures. There isn’t much time left if inflation shows further signs of easing in June or July. While the committee can delay action, there are limits. Watch not only for rate announcements but also for voting realignments, as these will significantly influence the August forecast. We will adjust our positions in response to how willing policymakers are to react to changing data. Create your live VT Markets account and start trading now.

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