Bank of England set to hold rates steady as it eyes stubborn inflation

The Bank of England is set to announce its interest rate decision on Thursday, following the Federal Reserve's move earlier in the week.

While the Fed is widely expected to initiate a rate-cut cycle with a significant 0.5% reduction, the BOE is unlikely to implement a second consecutive cut after its initial move in August, according to most analysts.

However, any unexpected rate cut could lead to significant market reactions, particularly affecting the pound.  

A majority of analysts believe it would be premature for the Bank of England (BOE) to implement another rate cut in consecutive months.

In August, the BOE lowered the policy rate to 5% from a 16-year high of 5.25%, marking the first rate cut in over four years. The decision was narrowly passed by the Monetary Policy Committee (MPC) with a 5-4 vote, signalling a cautious approach moving forward.

The economic landscape indicates that the BOE is likely to delay a second rate cut until November.

Inflation, wage growth, and labour market conditions are the three key indicators the bank monitors when adjusting monetary policy.

While all three metrics show signs of easing, recent data does not yet provide sufficient justification for an additional rate cut in September.

In July, inflation in the UK rose to 2.2% year-on-year, after cooling to 2% in the two previous months. Despite a significant drop in services inflation to 5.2%, it remains well above the BOE's 2% target, potentially keeping overall inflation levels elevated.

Wage growth has also moderated, falling to 5.1% in the three months to July, compared with 5.4% in May.

However, this decline is unlikely to be sufficient to prompt the BOE to follow through with another rate cut this month. Additionally, the labour