The Bank of England is looking more and more like an outlier amongst peer central banks. They haven't cut interest rates by very much thus far, and they continue to take a very hawkish line on inflation. They still see the need to squeeze inflation out of the UK economy. They're still alert to recent high inflation prints speeding through to higher wages.And unlike in August, in their September meeting they now see inflation risks as being prominently to the upside. So overall, a hawkish message coming out of the Bank of England September meeting.

Alongside their interest rate decision, we also learned about the Bank of England's plans for its balance sheet. And here they really delivered on predictability, announcing a decline in their balance sheet runoff to 70 billion, which was very much in line with what markets were expecting.

When all is said and done, we continue to expect the Bank of England to cut interest rates one more time this year, followed by three more cuts in the first half of 2026 to take bank rate to 3%. That is decidedly more dovish than what the market is currently pricing, and largely reflects our view that inflationary pressures are easing against the backdrop of expected fiscal consolidation, and that that will unlock the Bank of England to play catch up when it comes to interest rate cuts.