The Bank of England (BoE) updated its economic forecasts in August 2025, projecting inflation to reach 4.0% by September 2025, up from the previous June estimate of 3.7%, before falling to 2.0% in the third quarters of 2027 and 2028. Market-implied interest rates suggest a similar monetary policy loosening as forecasted in May, with the bank rate expected to be 3.8% in Q4 2025, 3.5% in Q4 2026, and 3.6% in Q4 2027. The BoE also revised wage growth forecasts upward, expecting private-sector regular wage growth to remain at 3.75% year-over-year in Q4 2025 and to increase to 3.25% and 3.00% in Q4 2026 and Q4 2027, respectively, indicating stickier wage growth and potential inflation persistence. GDP growth forecasts were slightly raised for 2025 to 1.25%, with unemployment rates expected to hover around 4.8% to 4.9% through 2025 to 2027. Meanwhile, UK employers have reportedly cut back hiring due to concerns over labor and tax costs, with hiring plans hitting record lows amid fears of increased taxation under the Reeves administration. Despite this, UK employment rose by 239,000 in April-June 2025, surpassing estimates, while wage growth remained strong at 5.0% year-over-year excluding bonuses. The jobs market shows signs of weakening with falling employment and vacancies, but wage growth remains robust, prompting the BoE to maintain a cautious stance on interest rates.