Episode Details

The Federal Reserve and Bank of England have both been in focus this week, with the Fed delivering a rate hike and the BoE keeping rates unchanged. In this episode, Imogen Bachra and Stuart Sparks examine what the decisions tell us about the outlook for inflation, interest rates and government bond yields – and why the BoE’s latest quantitative tightening (QT) announcement could have longer-term implications for the gilt market.

Key takeaways:

* The Fed delivered a hawkish-leaning rate hike, with the Chair offering little forward guidance and emphasising that future decisions will depend on the evolution of inflation and economic conditions.

* Markets are pricing a significant further tightening cycle, with close to 100bp of additional Fed rate hikes priced by the end of 2027. But the Fed’s projections imply a surprisingly benign path for inflation, with a return to target minus a meaningful rise in unemployment. 

* The Bank of England held Bank Rate at 3.75%, with the Monetary Policy Committee voting 6–3 in favour of no change. A November BoE rate hike remains the base case, although conviction has fallen.

* QT was the bigger market-moving announcement. The Bank plans to continue active gilt sales at £20bn a year, but will change how those sales are conducted and which maturities are involved.

* This could reduce some near-term pressure on long-dated gilt yields, however QT continues to create fiscal costs.

Host: Imogen Bachra, Head of Economics and Markets Strategy
Guest: Stuart Sparks, Head of US Rate Strategy
 
This episode was recorded on 17 September 2026.
 
You can also find this episode of Bondcast on Spotify and Apple Podcasts. 
 
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