BOE Rate Cuts on Hold: Markets Abandon Bets on Further Easing in 2025

Money markets are increasingly betting the Bank of England will keep interest rates at 4% for the remainder of 2025, backing away from expectations of further cuts.

On Monday, traders reduced their bets on another quarter-point rate reduction this year, with swaps at one point implying less than a 50% chance of such a move—a significant shift from earlier this month when a cut was fully priced in.

The change in sentiment reflects signs of faster inflation and a more resilient UK economy, which reduce the case for additional monetary easing. The BOE had most recently cut rates from 4.25% to 4% in early August, with the decision passing by a narrow 5-4 vote, highlighting the division among policymakers about the appropriate path for monetary policy.