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September 18, 2025
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BoE Trims QT To Hold Policy Steady

  • The MPC unsurprisingly held rates while seeking an answer to its key question around inflation risks amid elevated expectations and a possible structural shift.
  • It also trimmed QT by £30bn to £70bn, keeping active sales of long gilts steady in the next three quarterly auctions while skewing QT towards short and medium gilts.
  • We still expect the MPC’s presumption of rate cuts resuming to fade out in early 2026 as hawkish pressures persist. Some offsetting fiscal space arises from QT being trimmed.

By Philip Rush

September 17, 2025
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UK CPI Stickier For Longer

  • UK inflation data confirmed the substantial upwards drift in the consensus, worth 0.6pp since May and 1.1pp over the past year, while matching final forecasts for August.
  • The consensus has shifted further than usual over the past month. It now aligns with our hawkish forecast until April, when hope again dominates in dragging inflation down.
  • Although the MPC won’t be shocked by this outcome, the persistent excess in underlying inflation still seems set to keep it holding rates. We do not expect cuts to resume.

By Philip Rush

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