Bank of England Set to Hold in November as Services Inflation and Wage Data Pull in Opposite Directions
The Bank of England is widely expected to keep Bank Rate at 4.00% in November, as sticky services inflation offsets a cooling labour market — leaving sterling and gilts trading a two-sided policy risk.
The Bank of England enters its November meeting in an uncomfortable position. Consensus is for the Monetary Policy Committee to hold Bank Rate at 4.00% for a third consecutive meeting, but the vote split and the accompanying language are genuinely uncertain — a rarity this late in a tightening-to-hold transition.
Services inflation remains the hawkish pillar. The last print held above 4.5% year over year, well clear of the MPC's comfort zone, and private-sector wage growth, while decelerating, is still running near 4.8%. For a committee that has repeatedly cited domestic price persistence as its primary concern, those numbers argue against an early cut.
The cooling side of the ledger is real too. Headline CPI has fallen toward 2.8%, vacancy data have softened, and the housing market has stalled under the weight of higher mortgage resets. Friday's softer U.S. jobs report added to a global disinflationary tone that gilt markets have been only too happy to trade.
"The MPC is being asked to lean against a labour market that is already turning while services inflation refuses to follow," said Hugh Cartwright, UK rates strategist at Ashfield Partners. "That is a hold-with-hawkish-bias setup. The risk is that a single hot services print forces them into a February hike nobody currently prices."
Gilt markets have been calmer than their French counterparts but not immune to the global term-premium episode. Ten-year gilt yields eased Friday to around 4.35%, and sterling recovered against a softer dollar to trade near 1.275. UK bank stocks lagged European peers as net-interest-margin optimism faded.
November's decision is unlikely to move markets on the headline — the hold is priced. What matters is whether the MPC drops its explicit tightening bias, and whether the vote split widens in favour of cuts. Both would be the first real signal that the Bank is ready to follow the Federal Reserve's eventual easing path rather than fight it.
Sources
- Bank of England Monetary Policy Report and MPC minutes, September 2026
- UK Office for National Statistics CPI and average weekly earnings releases
More from CapitalWire
Inflation Returns to Target Range Across Advanced Economies
Headline inflation across the G7 has fallen to an average of 2.3%, the closest to target since 2020, though the composition of price pressures has shifted.
Global Factory Activity Stalls in October as Energy Costs Squeeze Margins
Flash purchasing managers' surveys for October showed an expansion losing momentum across the U.S., euro area and Japan, with input-cost gauges climbing as the oil shock feeds into producer prices.
Yen Firms as BoJ December Hike Odds Rise, Testing the Limits of Japan's New Policy Framework
USD/JPY slipped toward 154 as markets lifted the probability of a December Bank of Japan hike above 55%, with Tokyo CPI holding firm and the yen still historically weak despite the autumn's global rate swings.
Reader discussion