Bank of England says UK inflation has peaked after leaving rates at 4%; US job cuts jump as firms turn to AI – as it happened

4.06pm GMT Closing post The Bank of England has opened the door to a December interest rate cut after signalling inflation has peaked as it kept borrowing costs unchanged before Rachel Reeves’s make-or-break budget. With less than three weeks before the chancellor’s tax and spending statement, the Bank’s monetary policy committee (MPC) voted by a narrow five-four majority to keep borrowing costs unchanged for a second consecutive meeting. However, City economists said the knife-edge decision and the Bank’s latest predictions for a fall in inflation from the current rate of 3.8% would pave the way for Threadneedle Street to cut rates after the budget. Holding the casting vote, Andrew Bailey, the Bank’s governor, said he wanted to “wait and see” whether inflationary pressures would continue to fade and if Reeves’s budget would have an impact. “We held interest rates at 4% today. We still think rates are on a gradual path downwards, but we need to be sure that inflation is on track to return to our 2% target before we cut them again,” he said. Related: Bank of England holds interest rates as it warns unemployment on rise Investors were encouraged that the Bank predicted inflation has peaked, which may pave the way for rate cuts soon – depending on the economic impact of the budget… Related: Bank of England’s decision to keep interest rates at 4% is not all doom and gloom 4.04pm GMT Another bout of selling is hitting the financial markets. The S&P 500 index of US-listed shares is now down 1%, with the Nasdaq index down 1.6%. The Dow Jones industrial average is down 0.7%, led by Salesforce.com (-6.8%) and Amazon.com (-2.5%). Stocks wobbled earlier this week amid worries that a boom in valuations of artificial intelligence (AI) companies could be rapidly cooling. Related: Global stock markets fall sharply over AI bubble fears 3.51pm GMT Rathbones: More cuts are on the way John Wyn-Evans, head of market analysis at wealth manager Rathbones, has dubbed today’s decision a ‘dovish hold’, with the Bank of England playing second fiddle to Budget: “The hold was widely expected. However, unlike the US Federal Reserve’s recent ‘hawkish cut’, today’s decision could be described as a ‘dovish hold’. The vote split was just 5-4 in favour of no change vs the 6-3 average view of economists polled by Bloomberg. There was also a subtle change in the policy wording, with the path of future rate cuts being described as ‘gradual’ rather than ‘careful’. “Inflation risks are seen as more balanced than previously, helped by recent more favourable data. But Governor Andrew Bailey (who casts the deciding vote to hold) highlighted the need to see more data. Even so, more rate cuts are on the way, barring a shock. 3.49pm GMT 3.43pm GMT BT sheds broadband customers as housebuilding stumbles In the UK telecoms world, BT has lost a wave of broadband customers to rivals in recent months amid a “competitive” market, and revealed another 5,000 jobs have gone under its cost-cutting drive. The telecoms giant said its Openreach broadband customers fell by 242,000 in the second quarter, also because of a weaker broadband market. Chief executive Allison Kirkby explained that the market had ben flat to slightly down over the past year. She said some of this was “coming off the peaks of Covid, when people put second lines into their home so they could work from home,” and some of it was related to cost of living pressures. But, she added: “What we’re not seeing is the increased house building. That was meant to bring at least another 100,000 new homes into the market. That has not happened. So once the government get the house building growing, this market will be back to growth again.” BT’s revenues declined by 3% year-on-year to £9.8bn in the six months to 30 September. This was driven by declines in its legacy landline service as well as a weaker mobile phone market as people are holding onto their devices for longer. Its pre-tax profit slid by 11% to £862m. Kirkby said “people are just generally holding onto their devices for longer,” encouraged by financing schemes launched by BT and others, but also because handsets “are becoming ever more expensive, and there’s just not the same innovation in them”. “So whereas previously, people would maybe replace their handset every two years. The financing scheme that we launched 18 months ago meant that they hold on to them for three years. And actually the average handset cycle is more like four years.” BT did have a “very positive reaction” to the new Apple iPhone 17, and was pre-selling it ahead of other UK operators, Kirkby said. BT has pushed ahead with a turnaround plan that involves slashing costs and sharpening its focus on the UK and newer business lines. It said it cut its total workforce by 6% in the first half of the year, to 111,000 people. The job cuts form part of a programme to cut costs by £3bn a year. So far it has achieved £1.2bn over the first 18 months. 3.30pm GMT Sterling has gained half a cent against the US dollar today, after the Bank of England narrowly failed to cut interest rates today. The pound is trading around $1.31 today, a cent higher than the seven-month low hit earlier this week. 3.20pm GMT UK borrowing costs have dipped today. The prices of government bonds (gilts) have risen, which pushes down the yield (interest rate) on the debt, as investors have anticipated interest rate cuts as soon as December. Hussain Mehdi, director of investment strategy at HSBC Asset Management believes gilts still look attractive at current levels, saying: “There were just too many unknowns for the BoE to cut today. Despite a raft of recent data likely to push the MPC in a more dovish direction – including soft GDP prints over the summer, and weaker wage and CPI inflation – there seems to be a call for these trends to be more sustained before committing to another cut. In addition, this month’s budget could have some material economic impacts which the BoE may need to factor in. December remains a live meeting in our view, and we see rates settling around the 3.5% level.” “For investors, we believe UK gilts still look attractive given a starting point of high yields amid backdrop of rate cuts and falling inflation. UK stocks could also continue to perform amid rate cuts, helping to unlock value in many parts of the FTSE 100.” 2.25pm GMT Janet Mui, head of market analysis at wealth manager RBC Brewin Dolphin, agrees that governor Andrew Bailey’s vote will be ‘crucial’ in deciding whether the Bank of England cuts interest rates in December: With widespread expectation of potential tax hikes in the Autumn Budget, there is a plausible case for even weaker demand hence pushing inflation lower from 2026. The difficulty is that the BoE cannot consider hypothetical impact in its assessment prior to knowing the exact measures in the Budget. We will, therefore, only get more clarity post Budget and Governor Bailey’s vote will be crucial. Overall, markets believe the BoE has opened the door for a rate cut in December and has priced in that happening.” 2.13pm GMT Bank of England rate cut: what the experts say Reaction to today’s UK interest rate decision (no change) has been pouring in. Paul Dales, chief UK economist at Capital Economics, believes today’s decision to hold rates at 4% is a pause in the downward trend in interest rates rather than the end. Dales says: With a tightening in fiscal policy in the Budget on 26th November on the cards, the Bank will probably resume cutting rates in the coming months. We still think rates will be cut to 3.00% next year rather than to the 3.50% priced into the financial markets. Kathleen Brooks, research director at XTB, says UK borrowers could get an early Christmas present from the Bank of England in December: The Bank of England voted to keep rates on hold today, but there could be rate cuts coming as soon as next month. The most interesting part of this meeting was the vote split, which was 5-4 in favour of remaining on hold. Also, for the first time we got detailed reasons why each member voted as they did. The immediate market reaction to the decision was a rush to reprice December rate cut expectations, and, surprisingly, the pound is higher vs. the USD and the EUR. The interest rate swaps market is now pricing in a 65% chance of a rate cut next month, this is up from 29% at the start of this week, there is also a 52% chance of a cut in February. James Smith, ING’s developed markets economist for the UK, is more convinced that a rate cut is coming in December, adding: Everything hinges on Governor Andrew Bailey’s vote – and his comments make it abundantly clear that he is siding with the doves. Matt Swannell, chief economic advisor to the EY ITEM Club, says the MPC was “unusually divided”, leading to the narrow 5-4 vote, adding: Today’s decision clearly opens the door to a December cut, but that remains contingent on the incoming data. If there are further signs of falling inflationary pressures in the coming months and if the bulk of the tax rises expected at the Autumn Budget are introduced almost immediately, then there might be a slim majority on the Committee in favour of a Christmas cut. Any future cuts are likely to come at a relatively gradual pace as the Committee continues to remain wary of lingering inflationary pressures.” 1.51pm GMT US job cuts in October hit 22-year high as firms embrace AI Away from the Bank of England’s interest rate decision, we have new signs that artificial intelligence is hitting the jobs market. U.S.-based employers announced 153,074 job cuts in October, up 175% from the 55,597 cuts announced in October 2024, outplacement firm Challenger, Gray & Christmas has reported. That’s the highest for the month since October 2003. Andy Challenger, chief revenue officer for Challenger, Gray & Christmas, says some companies are reducing headcount after adding staff during the Covid-19 pandemic, while others are halting hiring as they adopt AI. Challenger explains: “October’s pace of job cutting was much higher than average for the month. Some industries are correcting after the hiring boom of the pandemic, but this comes as AI adoption, softening consumer and corporate spending, and rising costs drive belt-tightening and hiring freezes. Those laid off now are finding it harder to quickly secure new roles, which could further loosen the labor market. So far this year, US employers have announced 1,099,500 job cuts, an increase of 65% from the 664,839 announced in the first ten months of last year. That’s the highest level since 2020. 1.35pm GMT John-Paul Ford Rojas of the Daily Mail says people are worried that income tax will go up in the budget – would that give the Bank any impetus to cutting interest rates in December? Andrew Bailey sticks to his guns, repeating that the Bank will assess the budget measures when they are announced, rather than speculating about fiscal policy. 1.33pm GMT Szu Ping Chan of the Telegraph asks whether government action in the last year has helped, or hindered, the fight against inflation. Andrew Bailey resists any temptation to criticise the Treasury. He points out that the government has many public policy objectives. For example, that can mean allowing water bills to rise to fund the clean-up of the water industry – it’s not for the Bank to oppose that (but it can point out the impact on inflation). 1.29pm GMT My colleague Phillip Inman looks forward, asking why the Bank doesn’t expect to cut rates more quickly in 2026. The Bank’s scenarios show growth slowing and unempoyment rising in 2026, so why does they show restrictive interest rates? Andrew Bailey replies that the degree of restrictiveness is easing, and the Bank will continue to assess how restrictive the cost of borrowing is. 1.24pm GMT Joel Hills of ITV News asks why the Bank doesn’t support strong pay growth. Andrew Bailey replies that pay growth is an important determinent of inflation, while inflation expectations help to determine wage negotiations. We have been though a period where pay settlements were well above where our models suggested they would be. Pay settlements are coming down, he adds, and they will be an “important part of our considerations”. 1.20pm GMT Phil Aldrick of Bloomberg asks if the Bank would welcome action by Rachel Reeves to slow increases in regulated prices. Deputy governor Clare Lombardelli says that the Bank thinks around 0.4% of the current 3.8% inflation rate is due to those administered prices. 1.16pm GMT Bailey: I want more evidence that inflation has peaked before voting to cut rates Helia Ebrahimi of Channel 4 asks how Andrew Bailey can justify leaving interest rates on hold when the Bank believes inflation has peaked. The governor (who was effectively the swing voter in today’s 5-4 split) replies that he wants to see more evidence that inflation has passed its peak. Deputy governor Dave Ramsden (who did vote for a cut) provides some support for Bailey from the governor’s left flank, pointing out that inflation is still 3.8% – a long way above the Bank’s 2% target. 1.12pm GMT Bailey: There could be an AI bubble Asked about the risks of an artificial intelligence bubble in the financial markets, Andrew Bailey says it’s a danger, but also suggests AI could have significant benefits even if valuations are too high. The BoE governor tells reporters: “The markets could overprice the returns, but the returns could still be substantial. So we’ll see, but we are watching the ... implications for financial stability.” “It is, of course, perfectly possible and perfectly consistent that AI could be the next big mover in terms of productivity ... My own view personally is, I think, more likely than not it probably is. “But we’ve still got quite a way to go to actually sort of see that demonstrated. At the same time, we could have a bubble, because obviously the markets are pricing the future stream of returns from this, and that’s uncertain. And so, you know, those two things are not inconsistent.” 1.10pm GMT There’s no escape from the budget today! Dharshini David of the BBC asks if the recent increase in national insurance rates, and the minimum wage, made the Bank more hesistant to cut rates. Andrew Bailey says the Bank wanted to see how businesses responded to these higher costs. He says some firms have cut back on hiring, while others have raised salaries by less. 1.03pm GMT Sam Fleming of the Financial Times reminds Andrew Bailey that he has suggested he agrees with current interest rate market pricing* – does that mean 3.5% is the likely terminal rate for the Bank of England – what is the range of views on this on the committee? (Terminal rate is the point in an easing cycle when a central bank stops cutting interest rates). Governor Bailey replies that the market curve gives a ‘sensible path’ for interest rates, which isn’t always the case. On the terminal rate issue, he says the committee are split in two camps – some policymakers do have a prediction, and others (including Bailey) who don’t think there is enough confidence in any estimate of an equilibrium level of rates. * – in the minutes, Bailey says “Current market pricing is close to the path suggested by a forward-looking Taylor rule, which is a fair description of my position at present.” 12.56pm GMT Mehreen Khan of The Times asks Bailey about Rachel Reeves’s pre-budget speech on Tuesday, in which the chancellor said she wanted to help the Bank to cut interest rates by fighting inflation. Was the governor not convinced? Andrew Bailey replies that the Bank is not passing any judgement on what the chancellor said this week, it will wait to hear the budget. 12.53pm GMT Onto questions…. Ed Conway of Sky News asks what impact the impending budget had on today’s interest rate decision. Andrew Bailey says the Bank only knows one thing for certain – there’ll be a budget on 26 November. He adds that the Bank takes its decisions based on known government policy; it won’t speculate about what might be in the budget. 12.51pm GMT It appears that the Bank of England is keen to hear Rachel Reeves’s budget, in just under three weeks, before deciding it is safe to cut interest rates. Governor Andrew Bailey says the Bank will receive more data on inflation and cost pressures in the run-up to its next MPC meeting in December. The bank will also be able to analyse how this year’s budget will influence the economy and the outlook for inflation, he adds. 12.49pm GMT Worryingly, the governor of the Bank of England then points to signs that the economy is weakening. Andrew Bailey points out that household consumption growth has been weak, with the Bank only expecting a limited recovery in the near term. 12.45pm GMT Andrew Bailey then presents the press with several charts to show why the Bank of England believes disinflation will continue, and why it expects wage growth to slow. 12.41pm GMT Bailey: Two risks will determine future changes to monetary policy Andrew Bailey confirms that the Bank believes inflation has reached its peak, at 3.8% in the last few months. He says progress in disinflation has allowed five rate cuts, but cautions that future changes to monetary policy depend on two big factors. First, inflation is still well above the Bank’s 2% target – and there is a risk that it could be sticky, and that inflation expections could have been pushed higher. That could keep inflation higher for longer. On the other hand, activity in the economy is below its potential – as shown by falling vacancy numbers and stalling employment growth. If households and businesses are cautious about spending, inflation could fall below target. 12.35pm GMT Bank of England governor Andrew Bailey tells reporters in London that the Bank has recently lost a “much loved and respected colleague”, senior economist Pavandeep Dhami. “Pav” was a mainstay supporting the Bank’s monetary policy committee for a very long time, Bailey explains, and his “insight and commitment helped shape the documents published today”. 12.31pm GMT The Bank of England is holding a press conference now, to expain why it has left UK interest rates on hold. The #MonetaryPolicyReport press conference is about to start. Watch here: https://t.co/okzQiW0Gt7— Bank of England (@bankofengland) November 6, 2025 12.26pm GMT In a new move, the Bank of England has published statements from its nine MPC members explaining the logic behind their votes, at the end of the minutes of the meeting. Governor Andrew Bailey argues that upside risks to inflation have become less pressing since August, with signs that slack is building in the economy. He concludes: Rather than cutting Bank Rate now, I would prefer to wait and see if the durability in disinflation is confirmed in upcoming economic developments this year. But dovish policymaker Alan Taylor is rather damning about the Bank’s forecasts, saying that he disagrees with the “central projection”. Taylor, who thinks the economic outlook is weaker, explains: I judge that the current level of slack is larger, and the terminal rate is lower, implying that the current stance is more restrictive than intended. I place more weight on downside risks to inflation, which would materialise if current trends continue, rather than upside risks, which would require new developments to emerge. 12.21pm GMT Bank predicts growth will pick up in Q4 Bank of England economists predict UK growth will pick up in the final quarter of this year. They warn that underlying GDP growth remains subdued, but expect it to pick up slightly in the near term. The Bank estimates that the economy grew by 0.2% in July-September, less than it had previously forecast, which it attributes to “weaker-than-expected growth in exports to the US, as well as disruption linked to the Jaguar Land Rover cyberattack”. Headline GDP growth is expected to pick up to 0.3% in Q4. Updated at 12.22pm GMT 12.11pm GMT Bank: CPI inflation is judged to have peaked Newsflash: The Bank of England believes the recent rise in UK inflation is over. Announcing today’s decision to leave interest rates on hold, the Bank declares “CPI inflation is judged to have peaked.” UK inflation has been recorded at 3.8% in July, August and September – and the Bank is expressing confidence that the process of ‘disinflation’ isn’t over. Its latest Monetary Policy Report, just released, predicts that inflation is likely to fall to close to 3% early next year before gradually returning towards to the 2% target over the subsequent year. It says: Progress on underlying disinflation continues, supported by the still restrictive stance of monetary policy. This is reflected in an easing of pay growth and services price inflation. Underlying disinflation is being underpinned by subdued economic growth and building slack in the labour market. The Bank had previously forecast that inflation would peak at 4% in September. Updated at 12.16pm GMT 12.07pm GMT Dhingra and Taylor fear interest rates are 'significantly' too high Some Bank of England policymakers are concerned that interest rates are “significantly” too high. Four MPC members – Sarah Breeden, Swati Dhingra, Dave Ramsden and Alan Taylor – voted for a quarter-point cut in interest rates today, but were narrowly outvoted when governor Andrew Bailey joined the other side. The Bank says: These members attached a greater weight to downside risks, given that these would reflect a continuation of current trends, with particular concerns that household saving would remain elevated and weigh on consumption. For two members in this group (Swati Dhingra and Alan Taylor), policy was already significantly over-restrictive, which could unduly damage activity and possibly lead to an undershoot in inflation in the medium term. Updated at 12.15pm GMT 12.04pm GMT Bank split 5-4 on rate cut - governor in the majority Bank of England governor Andrew Bailey had the decisive vote at this week’s interest rate decision. The minutes of this week’s meeting show that five of the nine members of the Bank’s monetary policy committee voted to hold rates at 4%, while the other four wanted a cut to 3.75%. The bank says: Four members in this group (Megan Greene, Clare Lombardelli, Catherine L Mann and Huw Pill) placed greater weight on risks of persistence in inflation, requiring more prolonged monetary policy restriction. While there had been some progress in underlying disinflation, these members were concerned that this could stall, as they placed particular weight on the risk of higher inflation expectations or structural shifts leading to inflation persistence. One member in this group (Andrew Bailey) judged that the overall risks to medium-term inflation had moved down to become more balanced recently. But there was value in waiting for further evidence. 12.01pm GMT UK INTEREST RATE DECISION Newsflash: Bank of England policymakers have left interest rates on hold at 4% as expected, in a narrow vote. The BoE’s nine-member monetary policy committee (MPC) has voted to maintain Bank Rate at 4%, resisting any temptation to lower borrowing costs for the sixth time since August 2024. That’s a blow to borrowers hoping for lower interest rates, but will cheer savers. Policymakers were split 5-4 on the decision, though, showing that the decision was close. More to follow…. 11.54am GMT The pound is a little stronger today, as investors brace for the Bank of England’s interest rate decision in just a few minutes. It’s up a third of a cent at $1.309. Shares are lower in London, though, with the FTSE 100 share index down 30 points at 9747 points. Stand By Your Desks! The Bank of England is up in ten minutes.Let us set some market markers.FTSE 100 at 9750US $1.3091UK ten-year yield 4.47%— Shaun Richards (@notayesmansecon) November 6, 2025 11.21am GMT It’s a busy morning for fines for financial failings. The Central Bank of Ireland has fined Coinbase Europe €21,464,734 for breaching its anti-money laundering and counter terrorist financing transaction monitoring obligations. It says Coinbase Europe failed to properly monitor more than 30 million transactions over a 12-month period, worth over €176bn. JP Morgan has been hit with a €45m fine from Germany’s financial watchdog BaFin for shortcomings in its anti-money-laundering controls. 11.12am GMT Nick Atkin, CEO of housing assocation Yorkshire Housing, hopes the Bank of England cuts interest rates today. Atkin argues the BoE could help the economy by accelerating interest rate reductions, saying: “This isn’t just about housing, it’s about growth, jobs, and confidence. A decisive rate cut would give the economy room to breathe and provide the stability the housing sector desperately needs. “Every month rates stay high means fewer homes and fewer people with a decent, affordable place to live. “The Bank is chasing indicators it can’t control. Inflation isn’t high because we’re spending too much, it’s being driven by external shocks and supply issues. Keeping rates high won’t fix that, but it is stifling investment and housebuilding when we need both.” 11.05am GMT City braces for interest rate decision at noon There’s less than an hour to go until the Bank of England announces its decision on UK interest rates, and excitement is mounting. The fact several banks have recently predicted a cut, from 4% to 3.75%, today, while others expect no change, makes this month’s decision particularly tense. Lawrence Kaplin, chief market strategist at Equals Money, says: “Expectations are for the bank to leave interest rates unchanged at 4.0% but this is far from certain with markets pricing-in a 35% probability of a cut to 3.75%. Notably, this still leaves room for further GBP weakness should the BoE cut rates and/or downgrade UK growth prospects. Traders will be closely monitoring the vote count and new growth and inflation forecasts for clues as to the bank’s future monetary policy path.” AJ Bell investment director Russ Mould reckons today’s decision is “hard to call…with several observers expecting a rate cut even if the market is pricing in no change”. Mould adds: “Recent signs of easing inflation and a softer labour market would give the Bank some cover for a cut and the downbeat tone to Chancellor Rachel Reeves’ speech this week may encourage Governor Andrew Bailey and his colleagues to act ahead of the Budget later this month. “It all boils down to whether the Bank feels it needs to get one step ahead of any Budget-related economic setback. The central bank has form in being reactive rather than proactive, so the likely outcome still seems to be that it waits until December before making the next move. 10.42am GMT Bad weather may also have hurt UK builders last month. Thomas Pugh, chief economist at RSM UK and Ireland, says: “The Construction PMI fell again in October, likely in part due to Storm Amy and Benjamin which will have dampened construction activity in October. What’s more, uncertainty over the upcoming budget looks to be weighing on activity as firms hold off on major projects until the outlook becomes clearer. A direct read of the dismal Construction PMI translates to -1.3% growth in the three months to October for the sector, but the PMI has been far too downbeat of late. 10.37am GMT Today’s S&P Global construction PMI points to a sector firmly in retreat, says Matt Swannell, chief economic advisor to the EY ITEM Club. The weakness in the PMI is probably more reflective of the mood of construction businesses rather than activity, as the potential for taxes rises at the upcoming Autumn Budget and a delay in interest rate cuts have weighed on sentiment. “Prospects for the construction sector are mixed. Government investment and planning reforms will offer some support to the sector. However, ongoing uncertainty around the domestic economy and a further increase in taxes at the Autumn Budget may cause some private sector projects to be delayed or cancelled, while labour shortages continue to reduce the viability of some new construction.” 9.49am GMT October’s slump in construction activity is a blow to the “Build, baby build” ethic being pushed by UK housing secretary Steve Reed. Property agent Emma Fildes points out that sluggish demand and increased costs hurt the sector: Build, baby build.....Construction activity declines at fastest pace for over five years....S&P Global UK Construction Purchasing Managers’ Index showed activity further slipped in October due to sluggish demand and increased costs. Civil engineering and Residential development… pic.twitter.com/lypIrRQ3MH— Emma Fildes (@emmafildes) November 6, 2025 9.40am GMT UK construction activity falls at fastest pace for over five years Newsflash: Activity in the UK construction sector has declined at the fastest pace for over five years. Civil engineering and domestic housebuilding both shrank sharply in October, according to the latest survey of purchasing managers from data provider S&P Global. Construction firms reported a sustained downturn in new work last month, which was blamed on sluggish market conditions, fewer tender opportunities and delays with the release of new projects. There were also reports that elevated political and economic uncertainty had discouraged client spending, the report says. Building firms also cut staff at the fastest rate in just over five years, due to the shortfall in demand which also led to weaker demand for construction products. This pulled the S&P Global UK construction PMI down to 44.1 in October, from 46.2 in September. That shows the steepest decline in industry activity since May 2020 (any reading below 50 indicates a contraction), when building work was hit by the Covid-19 lockdown. Tim Moore, economics director at S&P Global Market Intelligence, says: “UK construction companies reported another challenging month in October as the prolonged weakening of order books so far in 2025 resulted in the fastest decline in business activity for over five years. Civil engineering and residential activity saw the fastest rates of contraction, while commercial building showed some resilience. Reduced workloads were again widely attributed to risk aversion and delayed decision-making among clients, which contributed to a slower-than-expected release of new projects. Subdued demand in the wake of heightened political and economic uncertainty also led to the steepest drop in input buying since May 2020. 9.15am GMT Professor Costas Milas, of the Management School at the University of Liverpool, is surprised by the speculation of a Bank of England interest rate cut today. He tells us that it’s not a good time to lower borrowing costs: For a start, the latest Divisia money growth data for 2025Q3 came at 3.1%, which is pretty healthy and promising for GDP growth. This will also “support”, to some extent, inflation. More worryingly, perhaps [see chart below] I notice that inflation persistence has slightly shifted upwards over the most recent period and that higher inflation is associated in general with higher inflation persistence. (I calculate inflation persistence by modelling UK inflation using divisia money, OBR output gap effects, and the effect from Global supply pressures). In my view, not a good time to cut Bank Rate now. 9.07am GMT Norway leaves interest rates on hold Over in Oslo, central bankers have voted to leave interest rates on hold. Norway’s central bank kept its policy interest rate on hold at 4.0% on Thursday, as expected. Norges Bank governor Ida Wolden Bache said in a statement: “The job of tackling inflation has not been fully completed, and we are not in a hurry to reduce the policy rate.” Norges Bank also indicated that it expects to cut interest rates over the coming year, if the economy evolves broadly as expected. 8.51am GMT China warms on trade deals with EU China said on Thursday it is willing to explore the possibility of various trade and investment agreements with the EU. Commerce ministry spokesperson He Yadong told a press conference that the two sides share “extensive common interests and huge space for cooperation.” The comment followed remarks by Chinese foreign minister Wang Yi on Tuesday, who told his Estonian counterpart in Beijing that China was ready to negotiate and sign a free trade agreement with the bloc. It comes amid urgent efforts by the EU to persuade China to ease up on restrictions on the supply of chips and rare earths, vital for car and other industries, something already achieved by Donald Trump. Speaking in Kuwait yesterday, trade commissioner Maroš Šefčovič said the EU had established a “special channel” of communication with Chinese authorities to secure the flow of rare earth materials vital for EU industries. He said he had discussed the issue directly with commerce Minister Wang Wentao several times, stressing that poorly managed export procedures could have a “very negative impact on production and manufacturing in the EU”. 8.46am GMT Sainsbury's CEO predicts budget uncertainty will delay spending The boss of Sainsbury’s has warned that UK consumers are likely to delay purchases until after the government budget on November 26. CEO Simon Roberts told reporters: “I think customers will be cautious. I think there’ll be some delayed spending until all of the news of the next few weeks comes through.” 8.35am GMT The pound is trading near a seven-month low this morning, as the City awaits the Bank of England’s decision on interest rates. Sterling is up just 0.1% against the US dollar at $1.3064, having threatened to fall below $1.30 earlier this week for the first time since April. Antonio Ruggiero, senior market analyst at Convera, reckons sterling remains technically oversold, but adds: Yet fresh dovish signals from the BoE today could validate further downside, keeping momentum stretched and positioning skewed. 8.24am GMT Bank shares rise following report Budget tax raid is off the table Shares in UK banks are rising in early trading, following reports that Rachel Reeves will spare them from a budget tax raid. NatWest (+2.4%) and Lloyds (+2%) are among the top rises on the FTSE 100 this morning. This follows a report in the Financial Times that the chancellor wants the sector to remain competitive, rather than hitting it with higher taxes. The FT say: “There’s obviously a list of possible tax measures, but raising taxes on banks is a long way down that list,” said one person briefed on her thinking. Another person close to the process said: “She is not minded to do this.” A third person said: “Banks are already paying a lot of tax. We aren’t going to do it.” 8.15am GMT Pharmaceuticals giant AstraZeneca has beaten earnings expectations this morning, helped by strong sales of its cancer, heart and kidney disease drugs. AstraZeneca, the most valuable company listed in London, grew its core earnings per share by 12% in the last quarter, with total revenues up 10%. Chief executive Pascal Soriot said in a statement: The strong underlying momentum across our business through the first nine months of the year sets us up well to sustain growth through 2026 and has us on track to deliver our 2030 ambition. Across our pipeline we have announced an unprecedented 16 positive Phase III trials this year, with four since our previous results including high-impact readouts for baxdrostat in hypertension and Enhertu and Datroway in breast cancer. We are also delivering on our strategy to strengthen our operations in the United States to power our growth. This includes a historic agreement with the US government to lower the cost of medicines for American patients, and broadening our US manufacturing footprint having broken ground at our new $4.5bn Virginia manufacturing facility in October.” 8.09am GMT UniCredit predicts rate cut, with governor Bailey having casting vote European bank UniCredit are also predicting a cut to UK interest rates today. They point out that the decision looks to be a very close call, but point to lower-than-expected inflation, a deteriorating labour market and likely significant fiscal tightening in the upcoming Autumn Budget. UniCredit told clients this morning: We expect the BoE’s Monetary Policy Committee (MPC) to cut the bank rate by 25bp to 3.75%. Financial markets are pricing in only a 20-30% chance of a rate cut today, but a 60-70% chance of a cut by the end of the year. Today’s MPC decision is likely to be very close. Four of nine MPC members (Megan Greene, Clare Lombardelli, Catherine L Mann and Huw Pill) are hawkish and dissented against the BoE decision to cut rates in August. Governor Bailey could potentially have the deciding vote. The risk to our call is that the governor might prefer to wait until December or early next year, to be sure that inflation has peaked, and to see the outcome of the chancellor’s much-anticipated Autumn Budget on 26 November. 8.02am GMT Drinks giant Diageo has cut its forecast for sales and profits in 2026, as it faces up to a slowdown in demand across North America and China. The maker of Pimm’s, Gordon’s gin, Johnnie Walker whisky and Smirnoff vodka now expects its organic net sales growth to be flat to slightly down, while organic operating profit growth is expected to be in the low to mid-single digits. Diageo also reported a 2.2% drop in net sales in the last quarter, including “weaker results in China” where demand for white spirits fell, and a softer performance in North America where weak consumer confidence hit US spirits sales. Nik Jhangiani, interim chief executive, said: “Net sales were flat organically in Q1, with growth in Europe, LAC and Africa offset by weakness in Chinese white spirits and a softer US consumer environment than planned for. We are not satisfied with our current performance and are focused on what we can manage and control; acting with speed to drive efficiencies, prioritising investment and adapting more quickly to an evolving consumer environment. 7.48am GMT ITV warns UK budget uncertainty is hurting ad revenue Uncertainty over this month’s budget is hurting the economy, UK broadcaster and content creator ITV has warned. ITV told the City this morning that advertising demand has weakened this quarter, with businesses showing “widespread caution” ahead of the budget on 26 November. As a result, it is planning to make £35m of “temporary savings”. Carolyn McCall, ITV’s chief executive, told shareholders: “UK macro data is showing a softening economy, with increased uncertainty in the lead up to the UK Budget which is impacting the wider advertising market, and we are adjusting our costs to match this current reduction in demand. Those cost-adjustments include £20m of savings by moving some programming from this year into 2026. ITV will also make £15m of non-content savings, through “reduced discretionary spend” and by cutting marketing spending. 7.35am GMT Speculation about the timing of rate cuts is reaching fever pitch, reports Kathleen Brooks, research director at XTB: Interest rates are expected to remain on hold, and there is only a 24% chance of a rate cut, however there is a whisper, that is getting louder, that the BOE should surprise markets and cut rates today due to the deteriorating economic backdrop, and weaker than expected inflation for September that did not reach the BOE’s expected peak of 4%. We expect the BOE to keep rates on hold on Thursday, since the most prudent course of action is to wait until after the Budget. This is expected to see unprecedented tax rises, which could slow growth and may boost inflation if fuel duty relief is scrapped or if VAT is increased. The effect of any tax increases would be known by the next Monetary Policy Committee meeting in February, so that might be the most prudent time to cut rates, in our opinion. The market seems to agree; there is a 56% chance of a February rate cut priced in by the swaps market ahead of this BOE meeting. 7.32am GMT Nomura: Rate cut is a close call Japanese bank Nomura have predicted the Bank of England will cut rates today. Last Friday, Nomura said they expect “a hawkish cut”, telling clients: We expect the Bank of England to cut rates by 25bp at its 6 November meeting and to remove from its guidance any reference to interest rates being “restrictive” and the need for further cuts. We believe weaker data over the past month support a rate cut, but that there is probably only one voting configuration (5-4) that can deliver it. Swing voters Bailey, Breeden and Ramsden will likely be needed to vote for a cut to get it over the line. We think a rate cut is a close call (we’d put our probability at just 60%), and note that consensus forecasts and market pricing are for no change in rates. The greatest risk to our November cut view is that the MPC opts to wait for substantially more news published ahead of the December meeting. Updated at 7.37am GMT 7.29am GMT How today's rates decision is taken Today’s decision on interest rates will be taken by the nine members of the Bank’s Monetary Policy Committee. These experts have a range of views about the correct stance of monetary policy, veering from doves who favour lower rates to protect the economy to hawks who want to prioritise the fight against inflation with higher borrowing costs. Two members – Alan Taylor and Swati Dhingra – are certainly in the dovish camp, while Catherine Mann and Megan Greene are on the hawkish end of the table. That leaves governor Andrew Bailey, chief economist Huw Pill, and deputy governors Sarah Breeden, Dave Ramsden and Clare Lombardelli. The last rate cut, in August, was a 5-4 split – backed by Bailey, Breeden, Dhingra, Ramsden and Taylor (who had initially wanted an even larger reduction). Updated at 7.29am GMT 7.20am GMT Introduction: Will Bank of England cut interest rates today? Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy. It may not quite be on a knife-edge, but today’s Bank of England decision on interest rates is providing plenty of uncertainty for the markets to chew on. At noon, the Bank’s monetary policy committee will reveal its latest decision on interest rates, which are currently set at 4%. And while the odds are in favour of a hold, the money markets last night indicated there is a one in three chance that base rate will be cut to 3.75% today. That would be the sixth cut to borrowing costs since August 2024, as the Bank eased back on the restrictive policy imposed to cool inflation. It’s certainly a tricky decision for the Bank. Although still too high, UK inflation was lower than expected in September at 3.8% – perhaps a sign that cost of living pressures are starting to cool. Interactive Policymakers will also have noted that Rachel Reeves appeared to prepare the ground for tax rises – which would be disinflationary, and hurt growth - in a rare pre-budget speech this week. Danni Hewson, head of financial analysis at AJ Bell, says: “It’s possible Rachel Reeves’ surprise press conference on Tuesday was partly a cry for help to the Bank of England. By promising to push down on inflation, she might have been signalling that the Bank didn’t have to wait until after the Budget to cut rates. Whether they do or not is a finely balanced call. A recent slowdown in wage growth could also persuade some of the Bank’s nine interest rates policymakers to vote for a cut. Julien Lafargue, chief market strategist at Barclays Private Bank, explains: “Recent economic indicators - including September’s lower-than-expected inflation, softer wage growth, and signs of slowing activity in Q3 - strengthen the case for the Bank of England to consider a rate cut this month. However, this would be a very finely balanced decision as the central bank may see the upcoming Autumn Budget as a key missing piece of the puzzle. Should the MPC decide to stay put, a cut in December would still be on the cards in our opinion.” The agenda 8.30am GMT: Eurozone construction PMI for October 9.30am GMT: UK construction PMI for October Noon GMT: Bank of England interest rate decision 12.30pm GMT: Bank of England press conference Updated at 7.50am GMT