The Bank of England finds itself navigating treacherous waters as it approaches the November rate decision, with the recent budget casting a long shadow over policy deliberations. Following the inflation rate plummeting to below target for the first time since 2021, the stage was set for a series of rate cuts before the end of the year. However, the Chancellor’s £40 billion tax-raising plan has introduced a new variable, accompanied by the OBR’s upward revision of inflation forecasts, tempering market expectations for more aggressive monetary easing.

Despite these headwinds, the consensus firmly leans towards a November rate cut, with the BoE likely opting for a more cautious stance at the December meeting. Furthermore, with a growing trend of global easing putting pressure on the central bank, there is still a need for the BoE to assess the full impact of the budget, coupled with inflationary pressures stemming from rising energy prices and oil shocks from Middle East tensions.