**BREAKING: Bank of England Expected to Hold Rates at 3.75% Through 2026, Says Societe Generale**
Societe Generale analyst Sam Cartwright projects the Bank of England will maintain its current 3.75% benchmark rate through 2026 as policymakers adopt a cautious wait-and-see approach. The forecast follows recent data showing cooling services inflation and signs of loosening in the UK labour market, both suggesting economic pressures are easing without requiring immediate intervention.
The extended hold represents a baseline scenario aimed at keeping underlying inflation pressures contained while avoiding premature easing that could reignite price growth. Cartwright notes conflict risks remain that could alter this trajectory. The steady-rate outlook affects UK government bonds, sterling positioning, and interest rate derivative pricing across European markets.
Traders should note this contradicts more aggressive easing expectations priced into some forward markets earlier this year. Banks and financial institutions face an extended period of stable but elevated borrowing costs impacting lending margins and funding strategies.
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FXnCO Insight
** Prepare for prolonged higher-for-longer GBP rates through 2026, favouring carry trades and pressuring rate-cut positioned derivatives to reprice.
Source: FXStreet