The Bank of England stands still tonight? Investors bet on a November rate cut.

The Bank of England is expected to choose not to cut interest rates for the second consecutive meeting, but instead maintain patience to evaluate the impact of its most aggressive policy tightening in decades. Economists and investors widely predict that the Monetary Policy Committee will keep the benchmark interest rate unchanged at 5%, a decision that will be announced at noon on Thursday in London time (19:00 on Thursday in Beijing time), just a day after the Federal Reserve cut its benchmark rate by half a percentage point. Although Bank of England Governor Andrew Bailey may hint to the markets that a rate cut in November is possible, he may not fully support the financial market's expectations for a quicker loosening of policy. Last month, the Bank of England's Monetary Policy Committee voted by a narrow margin of 5 to 4 to cut rates, but most economists expect this month's vote to maintain rates unchanged by a overwhelming majority of 7 to 2. Key inflation indicators, such as service prices, are still higher than the Bank of England's expectations. If there are still members supporting further lowering borrowing costs, these voices are most likely to come from the more moderate rate setters, Such as Swati Dhingra and Deputy Governor Dave Ramsden. The position of new member Alan Taylor is still unclear, but his past research has warned that tight monetary policy may have long-term hindrances on future economic growth. Chart 1 Economists expect that the Bank of England's forward guidance will not change significantly, leaving the possibility for another rate cut in November. Bailey stated last month at the Jackson Hole conference that rate setters need to be cautious as the job to combat inflation is not yet completed. However, he also expressed confidence in the second-round inflation effects being smaller than expected. If the decision not to cut rates mentioned in the minutes is described as being "carefully balanced," this could indicate that a rate cut might come sooner. Citi Group Chief UK Economist Ben Nabarro predicts that the committee will remain cautious, maintain a stable rate, and emphasize the necessity of continuing to implement monetary restrictions. Bloomberg economists Dan Hanson and Ana Andrade state that their base prediction is that the Bank of England will cut rates again this year, possibly in November, but do not rule out a more open attitude from the Bank towards gradually loosening policy and cutting rates again in December. Chart 2 Currently, the Bank of England is attempting to transition from asset purchases to repurchase operations, providing cash loans to banks using collateral. In the context of weakening global economic confidence, investors are increasing their bets on the Bank of England accelerating its rate-cutting cycle. Although data shows economic recovery has stalled and wage pressures have eased, traders now almost expect the Bank of England to cut rates in November and December, with expectations for four to five more rate cuts next year. The Bank of England may point out that after inflation rates were lower than expected in July and August, the inflation outlook is slightly mild. Despite conducting the next comprehensive forecast in November, the Bank may indicate that current expectations are for future inflation rates to decrease. The Bank of England originally expected a 2.4% price increase in August, but the actual increase was 2.2%, slightly above the Bank of England's 2% target. Chart 3 The Bank of England may also emphasize some signs indicating that the recovery from last year's economic downturn is weakening. In the early third quarter, GDP unexpectedly remained flat, meaning in the past four reporting months, the economy did not expand for three months. The strong pound, with the GBP/USD exchange rate currently at its highest level since the beginning of 2022, could potentially harm UK exports, further hindering economic growth.