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[Bank of England Decision Preview: Rates Expected to Remain Unchanged, Markets Betting on November Action, Hawkish Signals Under Watch] 1. The Bank of England is expected to keep its benchmark interest rate unchanged at 3.75% on Thursday, but the market is closely watching for any signals that soaring energy prices may force the central bank to follow the Federal Reserve and the European Central Bank in raising interest rates. 2. A survey last week showed that most economists expect the Bank of England to keep interest rates unchanged for the remainder of the year, with only three of the nine members of the Monetary Policy Committee expected to vote for a rate hike this week. However, financial markets priced in a 25 basis point rate hike in November at an 80% probability, with investors expecting about four rate hikes over the next year. Economists are relatively cautious, with only about one-eighth of respondents expecting a rate hike in November. 3. Since the beginning of this month, UK natural gas and Brent crude oil futures prices have risen by nearly 20%, putting pressure on the UK, which is highly dependent on energy imports. The UK's inflation rate reached 3.1% in August, higher than the central bank's 2% target; in the past five years, the Bank of England has only achieved its inflation target in three months. JPMorgan economist Allan Monks said he expects the central bank to keep interest rates unchanged this week to avoid reinforcing expectations of rapid tightening, but still anticipates a rate hike in November, noting that energy price trends suggest inflation could reach 3.9% by February next year, and the central bank "clearly has no reason to delay any longer." 4. Some analysts also believe a rate hike is not a certainty. They point out that the labor market is cooling and market interest rates are already at a high level, which in itself helps the central bank tighten financial conditions. Bank of England Governor Bailey said after the last policy meeting: "Please don't leave this room with the idea that 'the Bank of England is gradually moving towards raising interest rates.'" 5. Bond investors will also be watching the Bank of England's annual update on reducing its balance sheet. The Daily Telegraph reported that the central bank will stop selling 20-year and 30-year bonds that have been hit hard by the bond sell-off, which could leave more fiscal space for Chancellor Healy to prepare his first budget on October 28. The report also stated that the central bank may stop selling any bonds to the secondary market and instead sell them to the Office of the Debt Management. Royal Bank of Canada strategist Peter Schaffrik points out that this will make the DMO the sole supplier of UK government bonds in the market, thus giving it complete control over government bond issuance strategies.