PIMCO: Bank of England reaction

PIMCO: Bank of England reaction

June 19, 2026

Interest Rates Monetary policy UK

Peder Beck-Friis, Economist at PIMCO, comments on the Bank of England's interest rate decision:

'The BoE held its policy rate steady at 3.75%, as widely expected, in a short and largely uneventful meeting. The MPC seems comfortable staying on hold for now and did not signal an intention to hike unless signs of second-round effects on inflation emerge.

The outlook remains uncertain, but our case is that the rate stays on hold for the rest of the year. Recent data have on balance been dovish, and we do not expect meaningful second-round effects on inflation, given a soft labour market and tight fiscal policy. That said, the bar to hike remains low given the current geopolitical uncertainty.

We continue to find gilts attractive as part of a diversified portfolio of global interest rate exposure. The front end of the curve is still pricing around 40bps of hikes, and we agree with Bailey’s assessment today that this mostly reflects risk premium and compensation for uncertainty, rather than a central expectation of hikes.'

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