The Bank of England’s Monetary Policy Committee is widely expected to trim its base interest rate by 25 basis points, bringing it down to 4%. This move would maintain the Bank’s pattern of making quarterly rate adjustments rather than opting for more frequent cuts.
Unlike the US Federal Reserve, which kept rates on hold for yet another meeting, the Bank of England seems prepared to look beyond the recent rise in inflation. Its attention is shifting towards economic growth concerns following two consecutive quarters of contraction in GDP and a notable uptick in job losses during the spring months.
Recent measures introduced in the Labour government’s first budget have put pressure on businesses. These include a significant £26 billion increase in payroll taxes and a steep rise in the national minimum wage, both of which are believed to have dampened hiring intentions among employers.
The slowdown in recruitment is starting to take a toll, with the jobs market showing signs of weakening. Employers are scaling back due to higher costs and increased financial uncertainty, especially as economic momentum continues to soften.
Bloomberg Economics notes that while a rate cut is likely, the Bank of England may avoid giving strong signals about further reductions in the short term. Inflation has surprised on the upside recently, and consumer price expectations remain high.
Dan Hanson, Bloomberg’s chief UK economist, commented that the Bank is likely to remain cautious in its messaging. While inflation has exceeded earlier forecasts, the Bank will be wary of fuelling expectations for a series of aggressive rate cuts.
Governor Andrew Bailey has been consistent in reassuring markets that interest rate reductions will be gradual. He continues to emphasise that the recent spike in inflation is expected to be temporary and is unlikely to derail the Bank’s broader economic strategy.
The central bank will also be releasing its updated quarterly forecasts. These will be closely watched, particularly after the May forecasts underestimated inflationary pressures in the UK economy.
Investors are also eager for insights into the Bank’s plans for quantitative tightening. There is growing speculation that the BOE may slow down or limit the pace of active bond sales, particularly given recent volatility in the long-term gilt market.
This shift in monetary policy could signal a change in the BOE’s approach to managing its balance sheet, especially if concerns over bond yields persist. The Bank is due to make further announcements on this in September.
Beyond the UK, a number of global events are shaping the broader economic landscape. Trade data from several countries and a possible interest rate cut in Mexico are drawing attention.
Meanwhile, in the United States, the latest economic reports indicate cracks forming in the jobs market. Despite some early optimism in 2025, growth has faltered, and the Fed has decided to keep rates steady for now.
Upcoming data from the Institute for Supply Management’s services survey will offer insight into how well the US economy’s largest sector is holding up under pressure from tariffs and slowing demand.
On the Canadian side, employment figures for July will provide a fresh view of the labour market, following a surprising increase in job numbers in June. Trade data could also reveal how tariffs are impacting exports to the US.
Finally, political developments in Washington are being closely monitored. Following Adriana Kugler’s resignation from the Federal Reserve board, there is speculation over her replacement, especially with the Fed chair position up for renewal in May.
Certainly! Here’s the rewritten version of the article in British English, divided into 15 natural-sounding paragraphs for clarity and to avoid looking copied:
The Bank of England’s Monetary Policy Committee is widely expected to trim its base interest rate by 25 basis points, bringing it down to 4%. This move would maintain the Bank’s pattern of making quarterly rate adjustments rather than opting for more frequent cuts.
Unlike the US Federal Reserve, which kept rates on hold for yet another meeting, the Bank of England seems prepared to look beyond the recent rise in inflation. Its attention is shifting towards economic growth concerns following two consecutive quarters of contraction in GDP and a notable uptick in job losses during the spring months.
Recent measures introduced in the Labour government’s first budget have put pressure on businesses. These include a significant £26 billion increase in payroll taxes and a steep rise in the national minimum wage, both of which are believed to have dampened hiring intentions among employers.
The slowdown in recruitment is starting to take a toll, with the jobs market showing signs of weakening. Employers are scaling back due to higher costs and increased financial uncertainty, especially as economic momentum continues to soften.
Bloomberg Economics notes that while a rate cut is likely, the Bank of England may avoid giving strong signals about further reductions in the short term. Inflation has surprised on the upside recently, and consumer price expectations remain high.
Dan Hanson, Bloomberg’s chief UK economist, commented that the Bank is likely to remain cautious in its messaging. While inflation has exceeded earlier forecasts, the Bank will be wary of fuelling expectations for a series of aggressive rate cuts.
Governor Andrew Bailey has been consistent in reassuring markets that interest rate reductions will be gradual. He continues to emphasise that the recent spike in inflation is expected to be temporary and is unlikely to derail the Bank’s broader economic strategy.
The central bank will also be releasing its updated quarterly forecasts. These will be closely watched, particularly after the May forecasts underestimated inflationary pressures in the UK economy.
Investors are also eager for insights into the Bank’s plans for quantitative tightening. There is growing speculation that the BOE may slow down or limit the pace of active bond sales, particularly given recent volatility in the long-term gilt market.
This shift in monetary policy could signal a change in the BOE’s approach to managing its balance sheet, especially if concerns over bond yields persist. The Bank is due to make further announcements on this in September.
Beyond the UK, a number of global events are shaping the broader economic landscape. Trade data from several countries and a possible interest rate cut in Mexico are drawing attention.
Meanwhile, in the United States, the latest economic reports indicate cracks forming in the jobs market. Despite some early optimism in 2025, growth has faltered, and the Fed has decided to keep rates steady for now.
Upcoming data from the Institute for Supply Management’s services survey will offer insight into how well the US economy’s largest sector is holding up under pressure from tariffs and slowing demand.
On the Canadian side, employment figures for July will provide a fresh view of the labour market, following a surprising increase in job numbers in June. Trade data could also reveal how tariffs are impacting exports to the US.
Finally, political developments in Washington are being closely monitored. Following Adriana Kugler’s resignation from the Federal Reserve board, there is speculation over her replacement, especially with the Fed chair position up for renewal in May.
Inflation figures are due to be released in the Philippines on the same day as the UK’s anticipated interest rate decision. These figures will be closely watched across Southeast Asia, with upcoming reports from Taiwan, Vietnam, and Thailand following on Wednesday. Despite global uncertainty, inflation has remained largely stable in the region, allowing central banks to consider rate cuts as part of their monetary strategy.
Indonesia’s second-quarter gross domestic product (GDP) figures are also due on Tuesday. Economists are predicting that the data will reflect similar levels of growth to the previous year. Meanwhile, the Philippines is expected to post slightly stronger growth figures on Thursday, offering some optimism amid global economic turbulence.
Trade figures will also be under scrutiny this week, especially in light of former US President Donald Trump’s 1 August announcement of retaliatory tariffs. Many countries saw a spike in exports in July as businesses rushed to ship goods ahead of the new levies. As a result, this month’s trade data may be some of the strongest for the year before a potential slowdown.
New Zealand is scheduled to release updated employment figures, which will give a better indication of how its labour market is coping. In Singapore, retail sales data for June are due, shedding light on consumer activity in the city-state. Meanwhile, Japan will be releasing a broad set of financial indicators, including foreign bond holdings and household spending trends.
India’s central bank is also set to meet on Tuesday. According to Bloomberg Economics, the Reserve Bank of India is expected to pause rate changes for now, keeping the benchmark repo rate at 5.5% after a cumulative reduction of 100 basis points earlier this year.
Over the weekend, Indian Prime Minister Narendra Modi called on the public to buy domestic products to help protect the local economy. His statement comes on the heels of Trump’s move to impose a 25% tariff on Indian exports, which could have significant consequences for trade between the two countries.
In Europe, Switzerland will be in the spotlight as markets reopen on Monday following a national holiday. The Swiss government is likely to intensify its efforts to secure new trade agreements in response to the unexpected 39% US tariff. Inflation data are also due, with analysts expecting a subdued monthly figure of just 0.1%.
The eurozone is set to release various industrial and trade indicators this week, particularly from its four largest economies. These figures will provide more clarity on manufacturing performance in June and could potentially lead to adjustments in GDP estimates for both individual countries and the euro area as a whole.
Eurostat recently revealed that the eurozone economy grew by just 0.1% during the second quarter. Further employment data from France, including the national unemployment rate, will be released on Friday and may offer additional insights into the region’s labour market conditions.
The European Central Bank (ECB) has entered its summer break, so there are few public statements expected this week. One exception is Olli Rehn, the Governor of the Bank of Finland, who is scheduled to speak at an upcoming seminar. Former Bank of England Governor Mervyn King will also be in attendance.
Christodoulos Patsalides, a member of the ECB Governing Council, said in a recent interview that the eurozone economy continues to demonstrate resilience despite mounting international pressures. His Irish counterpart, Gabriel Makhlouf, suggested that interest rates are now at a level where the ECB can afford to take a “wait-and-see” approach.
In Turkey, inflation data due Monday are expected to show a slight decline in the annual inflation rate to 34%, down from 35% in June. However, monthly inflation may edge higher as a result of recent tax hikes and administrative pricing changes. These have been described by officials as temporary measures. A further rate cut by the Turkish central bank could come in September.
Sweden’s latest inflation report is due on Thursday. The CPIF measure, which the Riksbank targets, is expected to surpass 3%, indicating a potential challenge for the central bank as it attempts to balance growth and price stability.
In Africa, Lesotho’s Monetary Policy Committee is scheduled to meet on Tuesday. Analysts anticipate a 25 basis-point cut in the country’s policy rate, lowering it to 6.75%. The decision aims to provide relief to an economy severely impacted by Trump’s recent trade decisions, particularly within its struggling textile industry, which heavily relies on exports to the US.
Colombia’s central bank is set to release two important updates this week. Its quarterly inflation report is expected on Monday, followed by the minutes from its July policy meeting on Tuesday. These documents are likely to shed light on how policymakers are currently viewing inflation and fiscal pressures.
In previous statements, the bank had indicated a cautious path toward easing policy. However, recent inflation data has been more persistent than expected, and the economy has shown signs of surprising strength. Combined with growing concern over Colombia’s fiscal position, this could prompt a shift in tone.
At its last meeting, the central bank voted narrowly to keep the benchmark interest rate at 9.25%. Given the split nature of that decision, investors and economists will closely examine the meeting minutes for insights into the debate and future outlook.
Many analysts surveyed by Bloomberg expect Colombia’s central bank (BanRep), along with Brazil’s central bank (BCB), to take a slower approach to easing — with policy rates staying higher for longer, possibly well into 2027.
Meanwhile, Brazil’s central bank will publish the minutes from its policy meeting held on 29–30 July. At that meeting, the bank’s monetary policy committee voted unanimously to maintain the benchmark rate at 15%.
The statement issued immediately after that decision took a relatively hawkish tone. This suggests that policymakers in Brazil are in no rush to begin loosening monetary policy, and any easing may be postponed until at least 2026.
Market watchers will be combing through the minutes for any hint of a shift in stance or concern about inflation. However, most expect the central bank to remain firm for the time being, given persistent price pressures and global uncertainty.
Over in Mexico, attention turns to Banxico’s next policy move, with a decision due on Thursday. A 0.25% cut to the current interest rate is widely anticipated — and that consensus formed even before Donald Trump announced an extension to Mexico’s existing US tariff rates.
Out of 37 economists surveyed by Citi’s local unit, all but two expect the central bank to go ahead with the rate cut. If confirmed, this would bring the country’s benchmark interest rate down to 7.75%, offering some relief amid ongoing trade challenges.
Three of Latin America’s key inflation-targeting economies — Mexico, Chile and Colombia — are also expected to release consumer price index (CPI) data for July in the coming days.
Inflation in Mexico is forecast to have slowed to below 3.6%, offering further room for Banxico to ease monetary policy. This trend may help boost domestic consumption in the months ahead.
Chile’s inflation rate, meanwhile, is projected to have edged down to around 4%. If confirmed, this would mark continued progress towards the central bank’s target range and could support a more dovish tone going forward.
In contrast, Colombia may see a modest uptick in inflation from its previous figure of 4.82%. While still elevated, the slight increase is unlikely to significantly shift the central bank’s broader policy trajectory unless it becomes a sustained trend.
Across the region, central banks remain focused on balancing inflation control with the need to support economic growth amid global headwinds. The coming week’s data will be crucial in determining whether that balance can be maintained.
For more in-depth analysis of Latin America’s macroeconomic outlook, readers can refer to Bloomberg Economics’ full “Week Ahead” briefing for the region.
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