After the Bank of England Monetary Policy Committee (MPC) voted to keep UK interest rates unchanged, wealth managers discuss the impact and the possibility of a further rate cut.

As anticipated, the Bank of England Monetary Policy Committee (MPC) voted 7 to 2 yesterday in favour of holding UK interest rates at 4 per cent, with two dissenting member preferring to cut rates by 0.25 per cent to 3.75 per cent.

The market was expecting rates to be held at 4.0 per cent prior to the announcement, after a 0.25 per cent cut in August. With inflation still hovering at nearly twice the Bank of England’s (BoE) target, the case for further easing is growing harder to make.

Here are some reactions from wealth managers to the move.

Isaac Stell, investment manager at Wealth Club
“The BoE currently faces a dilemma, easing rates risks further fuelling inflation, but high rates strain an already weak economy. Add into the mix a government that is due to deliver a budget that needs to plug a black hole running into the tens of billions and the quandary becomes ever more complex. For now, the real action may lie not with the Bank, but with Westminster. The BoE remains sat on the sidelines, waiting to see what tax and spending decisions emerge in the budget. Moves prior to this could backfire and the Bank likely wants to see to see whether the government manages to navigate the budgetary gauntlet before making its next play.”

Amundi Investment Institute’s global head of macro, Mahmood Pradhan
“Leaving rates unchanged was widely expected, but the Bank of England still faces tough choices on what to do next. August’s figures showed that inflation is high and sticky, but growth is peaking and the US Federal Reserve seems to be back on a prolonged rate cutting path. We think the Bank will have to cut 25bp in December. The BoE’s balance sheet reduction by £70 billion over the next 12 months is in line with expectations, but the £20 billion in lower Gilt sales should support the bond market”

Jeff Brummette, chief investment officer at independent investment manager Oakglen Wealth
“The Bank of England voted to keep interest rates on hold with far greater consensus than last month’s vote, justified by inflation. While an inflation peak is expected in September, the data won’t be confirmed until next month. The MPC will be bothered by long-term gilt yields. It’s unclear if this is being driven more by inflation or the UK government’s tight fiscal position, but markets will be hoping for spending cuts in the November budget over any tax rises that might weigh on growth. It’s unlikely we’ll see further rate cuts before December but never rule it out – a decision in November’s MPC meeting could still hinge on surprise inflation or labour market data.”    

Ed Monk, pensions and investment specialist, Fidelity International
"The pathway to lower rates in the UK appears to be getting narrower, with rates held today and just one more rate cut now being priced in before 2027. With the Fed signalling further US rate cuts this year and eurozone borrowing costs already significantly lower, the UK risks becoming an outlier. The gilt market is indicating that no further rate cuts are likely this year, with the MPC meeting in March 2026 currently looking most likely to bring the next reduction. After that, it is not obvious when the next rate reduction will arrive - one more quarter-point cut from here may be as good as it gets before 2027.

"That was not part of the plan for households who have been hanging on under the pressure of higher borrowing costs. Mortgage rates have been elevated for almost three years since the mini-Budget and have been rising again recently despite the Bank of England rate cut in August. Persistent inflation has been making it harder for the Bank to relieve the pressure. This week, data showed inflation (CPI) holding level in August at 3.8 per cent and the Bank itself expects inflation to tick higher to 4 per cent next month. This compares to the Bank’s target for inflation of 2 per cent. None of this is good news for the health of the economy overall. The Treasury would like monetary policy to be aiding its push for growth but the reality is that it is likely to remain restrictive for some time to come.”

Executive director of the Institute of Economic Affairs Tom Clougherty
"The Bank's decision to hold interest rates while slowing the pace of quantitative tightening is a sensible one. It is hard to make a case for a more aggressive loosening of monetary policy while measured inflation remains stubbornly high. However, growth in broad money is low, which suggests that price rises are coming from supply-side factors – like taxes and regulatory restrictions that drive up costs. That is regrettable, but not something the Bank can or should do much about. What we really need now is spending restraint and a much more ambitious pro-growth agenda from the government."

Nicolas Sopel, head of macro research and chief strategist at Quintet Private Bank (parent of Brown Shipley)
“No surprises from the Bank of England today. As expected, the Bank Rate stays at 4 per cent following a 7-2 vote. But the real shift is in quantitative tightening (QT): the BoE is scaling back its bond sales, the so-called quantitative tightening, from £100 billion to £70 billion a year. That’s a win for markets— less gilt supply and a smaller hit to the Treasury’s budget covering the loss of the BoE, which’s been selling bonds with yields rising. Looking ahead, sticky inflation means rates are likely to remain at 4 per cent through 2025. But with the labour market softening — falling vacancies and easing wage growth — we expect inflation to cool in 2026, opening the door to rate cuts.

“For investors, the Fed’s rate cuts give Sterling room to strengthen against the dollar. We’ve trimmed USD exposure throughout 2025. Meanwhile, rising UK gilt yields vs falling US ones make gilts attractive from a valuation perspective. With rate cuts on the horizon, a slower pace of QT, and prospects for tax hikes, we remain overweight gilts in GBP portfolios.”

Simon Dangoor, head of fixed income macro strategies at Goldman Sachs Asset Management
“We do not see the BoE cutting rates for the rest of the year, but acknowledge that hinges to an extent on the outcome of November’s budget. Sticky inflation and subsiding labour market weakness should dissuade the MPC from easing, however a budget deemed to weigh further on UK growth prospects could prompt a swift response. Overall, our base case is for the BoE to resume cutting in February 2026.”

Michael Metcalfe, head of macro strategy at State Street Markets
“In contrast to the Fed, UK inflation is high enough to prevent the BoE going for further insurance cuts. And even with Gilts under pressure, they chose to only modestly reduce the pace of quantitative tightening, with only a small nod to selling fewer of their longer dated holdings. Altogether a robust assertion of central independence and their inflation focus. With online inflation still accelerating in September, this stance doesn’t look set to change anytime soon.”

George Brown, senior economist, Schroders
"With inflation heading in the wrong direction, there was no question that the Bank would be on hold today. But while markets are betting on rate cuts resuming next year, we remain doubtful this will materialise. In our view, the balance of risks is drifting towards renewed tightening given persistent domestic inflationary pressures. We continue to expect rates to remain on hold this year and next, but we can’t rule out the possibility that the Bank’s next move will be up, rather than down.

"A slowdown in quantitative tightening from £100 billion was clearly flagged, the only question would be to what extent. The Bank's announcement that it will allow £70 billion of gilts to roll off its balance sheet was broadly in line with our expectations, albeit meaning that active gilt sales will have to step up to £21 billion."

Hussain Mehdi, director of investment strategy at HSBC Asset Management.
"Having been ahead of the Fed this year in cutting rates, the Bank of England now finds itself constrained in its ability to deliver further easing. The labour market is cooling, but service sector inflation remains sticky despite moderating wage growth. An increasing number of MPC members are concerned about inflation expectations picking up. Macro signals point to “stagflation lite” - weaker growth and still warm inflation. With the BoE now unlikely to cut rates again until next year, Chancellor Reeves faces a major challenge in convincing the bond market vigilantes that UK public finances are on a sustainable trajectory. All eyes will be on November’s budget."

Andrew Zanelli, Head of Technical Engagement at Aberdeen Adviser
“Today’s decision to hold interest rates is in line with market expectations and the Bank of England’s quarterly approach to cutting rates. However, consumers are facing daily commentary, predictions and alarm, inflation remains high and speculation has already started ahead of the Autumn Budget. They may need to reassess their financial plans as a result and this is when professional financial planners and advisers prove their worth. By speaking to an adviser, consumers can not just understand what’s going on but also consider their choices within a longer- term strategy and make sure their money is working as hard as it possibly can.”

Ben Kumar, head of equity strategy at 7IM
"Between a rock and a hard place. If you're the Bank of England, do you care more about inflation or unemployment? And can you trust the data?  There's also a point where public opinion moves from caring about inflation to infuriated about interest rates - and the only way to tell when that is, is after the fact. So, it's no surprise that the Bank has done nothing today. "Don't just do something, stand there" can be a great bit of advice. Ultimately, I suspect the Bank will be pushed towards rate cuts and growth by circumstances and the government, although perhaps less ... obviously and aggressively than Donald Trump is going with the Fed!"