PIMCO: Comments on the Bank of England meeting

PIMCO: Comments on the Bank of England meeting

6 november 2026

Rente Monetair beleid Verenigd Koninkrijk

Peder Beck-Friis, Economist at PIMCO, comments on yesterday’s Bank of England meeting. His key takeaways:

  • The BoE hiked 25bps to 4.0%, as widely expected. Although the vote split was a bit more hawkish than expected, there were few major surprises, and the market reaction has been fairly muted. The key message from today’s meeting is that the core of the MPC, including Bailey, seems to be guiding towards one further hike before reassessing the outlook and risks.
  • We expect the BoE to hike in February, although continued strength in incoming data could bring that forward to December. The outlook thereafter is more uncertain and will depend in part on energy prices. While there are risks of further tightening, we do not see the UK economy as overheated and expect underlying inflation pressures to remain relatively benign over time.
  • Markets continue to price around three further hikes. We think this looks steep and likely reflects some risk premium, and over time we would be surprised if the UK policy rate settled above the US policy rate, as markets currently price. We continue to find gilts attractive at current levels as part of a diversified portfolio of global fixed income.
  • On paper, the UK’s deficit-reduction plan remains one of the most aggressive in the developed world. But this Budget once again saw the plan slip to the right, with borrowing revised higher across the forecast and progress in reducing the deficit from a year earlier almost grinding to a halt in the current fiscal year.  As with last year’s Budget, the Chancellor chose to loosen policy in the early years through higher spending, offset by the prospect of higher taxes in later years, although on a smaller scale than in previous Budgets.

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