Standard Chartered strategists Christopher Graham and John Davies expect the Bank of England to keep the base rate at 3.75% at the 30 April meeting. They forecast a pause in rate moves through this year.
They describe current policy as restrictive and point to a weaker macroeconomic backdrop, a softer labour market and limited fiscal support. They say these conditions differ from 2022 and support a wait-and-see approach.
Policy Signals And Near Term Risks
They expect most Monetary Policy Committee members to remain on hold while monitoring the Middle East situation and energy prices. They add that one or two members could shift towards voting for a rate rise.
They expect Governor Bailey to stress uncertainty and the risks to inflation and growth. They also note that a longer conflict could raise the risk of further tightening.
They compare the outlook to 2011, when oil prices rose beyond USD 120/bbl and consumer price inflation exceeded 5%, while the BoE kept rates steady. The article states it was produced with an AI tool and reviewed by an editor.
Back in April 2025, the view was that the Bank of England would hold its base rate steady at 3.75%. This perspective was based on a weakening economy and a softer job market, suggesting that policy was already tight enough. The expectation of a prolonged pause meant we saw opportunities in selling interest rate volatility.
Trading Implications For The Current Cycle
A good strategy at that time would have been to sell options on SONIA futures that would profit from the Bank Rate remaining stable. This trade was based on the belief that the market was over-pricing the risk of a rate hike due to temporary energy price fears. That wait-and-see approach proved correct as the Monetary Policy Committee did hold rates through the summer of 2025.
Looking back, we can see the data supported this stance, as UK inflation eventually cooled to 2.4% by the end of 2025 while unemployment ticked up to 4.5%. The comparison to 2011 was particularly useful for our thinking. In that year, Brent crude surpassed $120 a barrel, yet the Bank of England held rates steady at 0.50% because it viewed the inflation spike as temporary.
Now, in late April 2026, the situation is different, but the lesson remains valuable. The market is currently pricing in an aggressive series of rate cuts for the second half of this year. We believe this pace may be overly optimistic, creating a new opportunity for traders.
Given the still-persistent wage growth figures we saw last month, we see value in positions that would benefit if the Bank of England cuts rates more slowly than the market expects. This could involve using options on SONIA futures to bet against the sharp drop in short-term rates currently priced in. This mirrors the 2025 strategy of betting against the market’s most extreme pricing, but in the opposite direction.
