Core Viewpoint - The Bank of England is expected to maintain the benchmark interest rate at 4%, potentially ending the gradual rate cuts that began in August 2024, amid easing inflation pressures and signs of economic slowdown [1][2]. Economic Indicators - The Consumer Price Index (CPI) in September remained stable at a year-on-year increase of 3.8%, lower than the previously anticipated peak of 4% by the central bank [1]. - The Bank of England's Governor Andrew Bailey noted that the economy is operating "below potential growth levels," with a weakening labor market [1]. Monetary Policy Committee (MPC) Dynamics - There is a clear division within the MPC regarding the interest rate decision, with a survey indicating 6 votes for maintaining the rate and 3 votes for a cut [1]. - Hawkish members, including Chief Economist Huw Pill, express concerns over inflation remaining significantly above the 2% target, while others favor a rate cut to address economic slowdown and reduced employment demand [1][2]. Upcoming Meetings and Reports - The upcoming meeting will introduce a new Monetary Policy Report and minutes, marking a significant change in communication, where each MPC member will explain their voting rationale [2]. - The report will include an overview section integrating baseline forecasts, economic outlook, and policy logic, influenced by former Fed Chair Ben Bernanke's policy recommendations [2]. Fiscal Policy Considerations - The upcoming autumn budget, expected to include significant tax increases, aims to suppress inflation and create conditions for the Bank of England to lower key rates [2]. - Chancellor Rachel Reeves emphasized that her decisions will focus on reducing inflation and supporting economic growth while managing government debt [2]. Market Expectations - Analysts from various institutions suggest a possibility of an unexpected rate cut of 25 basis points to 3.75% during the meeting, reflecting the difficult balance between resilient inflation, weak economic growth, and forthcoming fiscal policies [3]. - Regardless of the decision, the Bank of England is likely to continue emphasizing a "gradual meeting" decision-making principle and reaffirming that rates are approaching a "neutral zone" [3].