BoE Meeting Preview: Will Rates Hold at 4.50%? Key Insights & FTSE 100 Outlook

• The Bank of England is expected to hold interest rates steady at 4.50% at its meeting today, with a potential 8-1 vote split.
• Sticky inflation remains a key concern for the BoE, influencing their cautious approach to rate cuts.
• Post-meeting comments and economic data will be crucial for market movement and potential volatility in the GBP and FTSE 100.

Most Read: Market Update: Dow Jones (DJIA), S&P 500 React to Fed Rate Decision

The Bank of England’s Monetary Policy Committee (MPC) will announce its much-anticipated policy decision today. Market participants

The result of these developments has led to an increase in rate cut expectations as market participants weigh up a host of uncertainties for the rest of year. As things stand, heading into tomorrow's meeting and markets are pricing in around 59 bps of rate cuts through December 2025. This has increased from 50 bps a month ago.

Bank Rate Expected to Stay at 4.50%

Both experts and financial markets predict that the Bank of England (BoE) will keep the Bank Rate steady at 4.50% during this meeting. Since the March meeting doesn’t include the release of the Quarterly Monetary Policy Report (MPR) or a press conference, big changes or new announcements are unlikely.

In February, the BoE took a cautious step by cutting rates by 25 bps, signaling a slow and steady approach to keeping borrowing costs high enough to fight stubborn inflation.

For tomorrow's meeting, the vote is expected to be split, likely 8-1. Swati Dhingra, known for her preference for lower rates, might push for a larger 50 bp cut. On the other hand, hawkish members like Catherine Mann are expected to support holding rates steady, with her surprising 50 bps push in February seen more as a one-time signal than a lasting position.

Sticky Inflation Keeps the BoE Careful

Although much of the economic data matches the Bank of England’s (BoE) expectations, inflation remains a key concern. In January, headline inflation (CPI) rose to 3.0% year-on-year, slightly above the BoE’s target but enough to encourage a cautious approach. Services inflation, at 5.0%, highlights the risk of persistent price increases that weren’t fully anticipated in earlier forecasts.

The labor market adds to the complexity. While data issues make it harder to get a clear picture, surveys like February’s PMI employment index, which dropped to 43.5, point to growing challenges in hiring. At the same time, wages grew by 6.0% year-on-year in late 2024, further complicating the situation.

These factors likely push the BoE’s Monetary Policy Committee (MPC) to remain cautious, focusing on gradually bringing inflation back to the 2% target. Policymakers continue to stress the importance of assessing the situation one meeting at a time.

Key Factors to Watch After Tomorrow’s Decision

After the Bank of England’s decision, here are the main things to keep an eye on:

• Voting Patterns: If the vote split isn’t the expected 8-1 and shifts to something like 6-3 or 7-2, it could hint at disagreements within the committee and affect how markets view future policy moves.
• Policy Statement: Any tweaks to phrases like “remaining restrictive for sufficiently long” might suggest the BoE is considering speeding up or slowing down rate cuts and will likely stoke some volatility in the GBP and FTSE 100.
• Economic Data: Inflation, wage growth, and job market stats will be crucial for seeing how well the economy matches the BoE’s forecasts.

Market participants should also pay attention to speeches from BoE officials, like Governor Andrew Bailey, even though there won’t be a press conference. These talks often reveal subtle insights into the committee’s thinking and economic priorities.

Given that a rate hold seems to be a conclusion The post meeting comments could shake markets and stoke volatility. This is where the real juice will be in my opinion and what I will be keeping an eye on.

At present the probabilities favour the Bank of England to make three more 25 bp rate cuts in May, August, and November 2025, which could lower the Bank Rate to 3.75% by the end of the year. However, this would depend on how inflation, the job market, and the overall economy perform in the coming months.

If inflation stays higher than expected, the BoE might delay rate cuts or keep rates high for longer. On the other hand, if the job market weakens and inflation continues to cool, the BoE could speed up rate cuts later in the year.

The BoE is likely to stick to its “gradual and careful” approach, but if economic growth slows further, the chances of quicker rate cuts may increase slightly.

From a technical standpoint, the FTSE 100 is in a bearish trend following the daily candle close below the February 24 swing low at 8623.

The index bottomed out just below 8500 handle before rallying higher. However a daily candle close is needed above 8754 for a change in character.

Until then though the bullish structure remains intact with two consecutive doji candle closes a sign of the uncertainty in markets at present.

Looking at the case for a bullish move and there is a sign that momentum may be shifting. The 14-period RSI has crossed the neutral level at 50, which hints at a shift in momentum from bears to bulls.

Immediate resistance rests at 8781 before the ATH at 8914 comes into focus.

Support rests at 8596 before the 8500 comes into focus. A break below may find support at the 100-day MA which currently rests at 8412.

FTSE 100 Daily Chart, March 20, 2025

Support

• 8596
• 8500
• 8412

Resistance

• 8781
• 8914
• 9000

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