BOJ Rate Decision in Focus as Sticky Inflation, Weak Yen Shape USD/JPY and Nikkei Outlook 
RBA Signals More Rate Hikes Possible as Australia Battles Stubborn Inflation 
Gold Prices Steady as Hormuz Tensions Fuel Fed Rate Concerns 
US Stock Futures Flat as Iran Strait of Hormuz Demands Fuel Oil Concerns 
Brazil Cuts Selic Rate to 14% as Inflation Eases but Risks Persist 
Asian Currencies Steady as Markets Await U.S. Jobs Data 
Asian Stocks Slide as Semiconductor Selloff Weighs on South Korea and Japan 
US Yen Intervention Unlikely to Deliver Lasting Recovery, Yardeni Says 
US Dollar Gains as Iran Tensions, Fed Rate Hike Bets Rise 
China Trade Surplus Beats Forecasts in July as Exports Stay Strong 
BOJ Signals Faster Rate Hikes as Inflation Risks Raise September Move Odds 
US Job Growth Seen Picking Up in July 
The Bank of England (BoE) is widely expected to keep interest rates unchanged this week as policymakers assess the growing economic risks tied to the ongoing Iran war and rising inflation pressures. After maintaining borrowing costs at 3.75% in March, the central bank is likely to adopt a cautious stance again, balancing concerns over economic slowdown with persistent inflation threats.
Financial markets, however, are signaling a different outlook. Investors are increasingly betting on potential rate hikes later this year, with expectations of incremental increases starting as early as July, followed by possible moves in September. Despite these projections, BoE Governor Andrew Bailey has indicated that raising rates too soon could be premature given the uncertain economic environment.
Economists remain divided. A Reuters poll suggests most analysts expect the Monetary Policy Committee (MPC) to vote overwhelmingly—possibly 8-1—to hold rates steady. Still, some policymakers may push for a proactive increase to 4.0% to curb inflation risks, especially as memories of the UK’s inflation surge above 11% in 2022 remain fresh.
The UK economy is particularly sensitive to rising energy prices due to its heavy reliance on natural gas. Recent data highlights a sharp increase in business input costs and record-high expectations for future price hikes, raising concerns about sustained inflation. The International Monetary Fund forecasts UK inflation could peak at 4% this year, reinforcing the pressure on policymakers.
BoE Chief Economist Huw Pill recently emphasized the risks of waiting too long to act, noting that delayed responses could worsen inflation outcomes. Meanwhile, other MPC members are weighing weakening consumer confidence, slower hiring, and broader economic uncertainty.
With limited clarity on how long the Iran war will disrupt global energy markets, the BoE is expected to reiterate its readiness to respond if conditions worsen. Updated economic forecasts due this week will likely show higher inflation and weaker growth through 2026 and 2027. For now, the central bank appears focused on gathering more data before making any decisive policy shifts.
