The Bank of England’s decision to keep rates at 4% with a vote of 7-2, suggests that August’s cut will likely stand alone, with no further easing expected this year. For wealth and asset managers, the message is clear: persistent inflation and a higher-for-longer stance will shape portfolio positioning. From sterling strength and resilient gilt yields to sector-specific equity impacts and subdued property markets, asset allocation strategies must adapt to a prolonged plateau in borrowing costs.
Wealth and asset managers will be watching closely to assess the impact on market sentiment, portfolio positioning and client strategy. Industry professionals are sharing their views on the announcement:
Derrick Dunne, CEO of YOU Asset Management, comments on today’s Bank of England base rate decision:
“As expected, the Bank of England has held its base rate. While this isn’t good news for the Government’s plans, it does reflect the nervousness that still seems to prevail over the inflation rate and wider economic uncertainty.
“Fortunately for Rachel Reeves, relief appeared from across the Atlantic last night in the form of a US Fed cut. With so much influence on the global economy and bond markets, this might just help her out when crunching the Budget numbers – particularly on the cost of debt repayments.
“UK gilt yields are looking a little healthier now than they were at the beginning of the month. This is not being driven by events in the UK, rather it is global trends and the omnipresence of the American economic juggernaut dictating movements.
“At home, Reeves will not be thanking Bailey et al for their caution on the UK base rate. The outlook for the UK’s economy is still very bleak. Inflation is still too high and the labour market is now showing real signs of duress.
“The expectation now is that once inflation shows real signs of a fresh retreat, then the MPC will start cutting again. But November’s Budget will need to show real restraint in order to prevent more inflationary measures which could scupper the whole plan.
“Anyone who is unsure about how this could impact their personal finances should speak to a financial planner.”
Richard Flax, Chief Investment Officer at Moneyfarm:
“As expected the Bank of England maintained the interest rates at 4.0%. This reflects a cautious stance amid persistent inflationary pressures and a fragile economic outlook. Despite signs of economic stagnation, including flat GDP growth and slowing wage increases, the Monetary Policy Committee opted to pause further rate cuts, likely influenced by inflation holding steady at 3.8%, nearly double the Bank’s target.
For households and businesses, the pause in rate cuts offers limited immediate relief. Mortgage rates have eased slightly since the last cut in August, but uncertainty remains high. Savers, meanwhile, continue to face declining returns, underscoring the broader challenges in the financial landscape.
Ultimately, the Bank’s move signals a wait-and-see approach, balancing the need to support growth with the imperative to keep inflation in check. A more coordinated policy effort, combining monetary restraint with targeted fiscal support, may be necessary to steer the UK economy toward a more stable recovery.”
Jonathan Andrew, CEO of Bibby Financial Services:
“Today’s Bank of England decision to hold interest rates at 4% comes as little surprise, given yesterday’s announcement that inflation remains significantly higher than the Bank’s target.
“With the ONS forecasting weak GDP growth and the tightening of the labour market, it feels unlikely that interest rates will fall this side of the New Year.
“While UK SMEs are demonstrating resilience in the face of difficult trading conditions, economic challenges continue to apply further pressure. The Chancellor has a critical opportunity in the Autumn Budget to prove that SMEs remain at the centre of the government’s growth strategy. What that looks like is simpler taxes and greater incentives to help small businesses not only survive, but flourish.”
Simeon Willis, Chief Investment Officer, XPS Group:
“There was no expectation of a rate cut today, with UK inflation still well above target and set to rise further. This contrasts with the US which saw a 0.25% interest rate cut yesterday, where inflation is almost 1% lower. For pension schemes, the impact will be minimal, as long-dated gilt yields and inflation expectations are moving somewhat independently of short-term rate decisions and inflation prints.
Defined Benefit pension schemes have generally been benefiting from a wave of rising long dated gilt yields, needed to attract new gilt investors given that pension scheme demand for new issuance has likely passed its peak. However the dynamics of the gilt market has varied considerably across different maturities.
Short end yields have been tethered by the Bank rate, whereas long dated yields reached their highest levels this century in early September with 20 years gilt yield reaching 5.7%, and are currently sitting just under this recent high watermark. In further contrast, at the hyper long end beyond 50 years, there is a rump of pension benefits that fall so far into the future that there isn’t even a gilt that can be bought to match them. This combined with a market expectation for reduced future long dated issuance, has propagated demand for the longest maturity gilts available which remain relatively expensive compared to the rest of the gilt market.
Overall schemes are benefiting from higher funding levels, but volatile gilt dynamics make managing liabilities a choppy ride.”
Isaac Stell, Investment Manager at Wealth Club said:
“The Bank of England has held interest rates at 4.0% in September, following a 0.25% cut in August. With inflation still hovering at nearly twice the Bank’s target, the case for further easing is growing harder to make.
The BoE currently faces a dilemma, easing rates risks further fuelling inflation, but high rates strain an already weak economy. Add into the mix a government that is due to deliver a budget that needs to plug a black hole running into the tens of billions and the quandary becomes ever more complex.
For now, the real action may lie not with the Bank, but with Westminster. The BoE remains sat on the sidelines, waiting to see what tax and spending decisions emerge in the budget. Moves prior to this could backfire and the Bank likely wants to see to see whether the government manages to navigate the budgetary gauntlet before making its next play.”
Michael Metcalfe, Head of Macro Strategy at State Street Markets, reacts to today’s BoE interest rate decision:
“In contrast to the Fed, UK inflation is high enough to prevent the BoE going for further insurance cuts. And even with Gilts under pressure, they chose to only modestly reduce the pace of quantitative tightening, with only a small nod to selling fewer of their longer dated holdings.
Altogether a robust assertion of central independence and their inflation focus. With online inflation still accelerating in September, this stance doesn’t look set to change anytime soon.”
Janet Mui, head of market analysis at wealth manager RBC Brewin Dolphin said:
“The BoE kept rates on hold as was widely expected, with inflation still elevated and wage growth remaining robust. Revised labour market data also showed that layoffs were less severe than initially feared, reducing the case for imminent easing. With inflation proving stubborn, particularly in services, the BoE is unlikely to cut rates for the remainder of 2025.
Unlike the Fed, which has shifted focus on the labour market, the BoE does not have the luxury to ease policy in the face of a weakening economy. Even as the UK economy cools, inflation is not backing down as hoped, which leaves the BoE stuck.
Ongoing tight monetary conditions may risk deeper economic weakness in 2026 and beyond, which could eventually curb inflation and justify rate cuts, but not yet.
Despite fiscal concerns and subdued growth, sterling has strengthened against the U.S. dollar, driven by the diverging policy paths of the BoE and the Fed.”
William Marshall, Chief Investment Officer, HRIS – Hymans Robertson Investment Services, says:
“With the hold confirmed, as expected, investors have been more focused on the QT figure. We now know the QT figure will be £70bn from October 2025, which is very close but lower than the consensus 75bn that the markets priced in.
“There were several reasons why the MPC has opted to slow the pace of QT. Their need for policy calibration, dictates that with the BoE moving to a less restrictive monetary stance over the last 12 months, it will not need as much QT to meet its aim.
With fewer gilts set to mature in the coming year, maintaining the £100bn target would require a sharp increase in active sales, from £13bn to c.a. £50bn. On top of this, the gilt market, particularly the longer-dated bonds, is facing pressure amid a decline in natural buyers such as pension schemes. The BoE may be reluctant to exacerbate this by ramping up sales.
“The market reaction has been limited, however, we expect to see increased focus on long-dated gilts, especially as we approach the Budget. Looking forward, advisers should pay close attention to their government bond exposure and consider a more globally diversified approach.”
Nicolas Sopel, Head of Macro Research and Chief Strategist at Quintet Private Bank (parent of Brown Shipley):
“No surprises from the Bank of England today. As expected, the Bank Rate stays at 4% following a 7-2 vote. But the real shift is in quantitative tightening (QT): the BoE is scaling back its bond sales, the so-called quantitative tightening, from £100bn to £70bn a year. That’s a win for markets— less gilt supply and a smaller hit to the Treasury’s budget covering the loss of the BoE, which’s been selling bonds with yields rising.
Looking ahead, sticky inflation means rates are likely to remain at 4% through 2025. But with the labour market softening — falling vacancies and easing wage growth — we expect inflation to cool in 2026, opening the door to rate cuts.
For investors, the Fed’s rate cuts give Sterling room to strengthen against the dollar. We’ve trimmed USD exposure throughout 2025. Meanwhile, rising UK gilt yields vs falling US ones make gilts attractive from a valuation perspective. With rate cuts on the horizon, a slower pace of QT, and prospects for tax hikes, we remain overweight gilts in GBP portfolios.”
James Athey, co-manager of the Marlborough Global Bond Fund, said:
“All in all, this was a very consensus outcome. No change to rates, a 7-2 vote and a reduction in the QT target from 100 billion to 70 billion – all largely expected.
“Guidance on future policy remains rooted in data dependency, uncertainty and caution. Domestic inflation is still too hot for comfort, even though so much of that is self-fulfilling and administered and so completely out of the Bank’s control.
“The fact that just 20% of the active sales from the APF will come from the long end is recognition of the challenges that this area of the gilt market faces. But it can’t create the demand that’s lacking, because of the behaviour of DB pension schemes and nerves about fiscal policy.
“The Bank must also be very careful that its actions aren’t seen as being driven by these fiscal challenges, and its rhetoric mustn’t contradict the previous – and utterly ridiculous – notion that QT is an inert process with no market or monetary impact.
“All in all, the Bank is still in a mess of its own and the government’s making – and nothing we’ve seen or heard today will change that.”
Natalie Brain, Partner in LCP’s investment team, commented:
“The Bank of England’s decision to hold rates at 4% reflects concerns over UK inflation which remains well above target. UK CPI inflation was 3.8% over the year to August, unchanged from the year to July, even though economic growth remains weak. The MPC’s decision contrasts with the US Federal Reserve’s move yesterday to cut interest rates for the first time this year.”
“As well as holding interest rates at 4.0%, the MPC also announced that it would dial back the pace at which it is reducing the Bank’s gilt holdings, moving from sales of £100bn pa to £70bn pa. Going forward, sales will also be weighted more towards short and medium maturities (around 40% each), with only 20% in long maturities. This is intended to ease pressure on the UK gilt market, particularly at the longer end, which has been volatile in recent months amid concerns over the UK’s fiscal position.”
George Vessey, Lead FX & Macro Strategist at Convera:
“Sterling briefly spiked above $1.37 following the Fed’s rate cut but quickly reversed, now trading below $1.36 ahead of today’s Bank of England (BoE) decision. Against the euro, sterling continues to trade sideways, holding within a tight €1.15–€1.16 band through September. The pair appears anchored by balanced rate expectations and muted macro surprises. Without a fresh catalyst – be it a material shift in BoE or ECB policy, or a sharp turn in data – the current range looks likely to persist.
Back to GBP/USD though. The post-Fed move resembled a classic “buy the rumour, sell the fact” reaction, fuelled further by Powell’s hawkish press conference. Still, with the Fed now easing, he BoE’s more cautious stance keeps policy divergence in play, which could support another test of the $1.3787 high before year-end. That said, a pullback toward $1.35 remains plausible in the near term. Today’s BoE decision may prove pivotal. Any surprises in tone or vote split could help steer GBP/USD out of its current chop and set the tone for Q4 positioning.
We expect the BoE to keep Bank Rate at 4% and slow the pace of quantitative tightening (QT) amid concerns about bond market volatility. A September cut was always unlikely, and recent data has done little to shift that view. Markets are aligned, pricing just a 2% chance of a rate cut. The expected vote split is 8-1, with Alan Taylor likely dissenting in favour of a 25bp reduction.
Looking ahead, further easing remains on the table, but the MPC is likely to proceed cautiously. August’s meeting revealed a tight vote and hawkish tone, with inflation risks taking precedence over growth and labour concerns. Slowing wage growth hasn’t yet translated into lower services inflation, and elevated food and fuel prices could push up household expectations.
Meanwhile, QT may be the more market-sensitive decision today. Maintaining the current £100bn pace risks jolting gilt yields amid recent volatility. We expect the MPC to lower next year’s target to around £75bn, implying £26bn in active sales. A deeper cut is possible if the committee aims to avoid market disruption.
The BoE has flagged structural shifts in the gilt market and rising global bond issuance as potential risks to QT execution. We anticipate a tilt toward selling short- and medium-dated gilts, where liquidity is stronger, and stress less acute. Long-end yields have risen sharply since last September’s QT announcement, underscoring the need for a more calibrated approach.”
