Britain’s inflation rate remains high at 3.8%, and the Bank of England remains cautious about cutting interest rates. What does it mean for cryptocurrencies?
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Britain’s inflation rate remained at 3.8% in September, well above the BoE’s 2% target, and expectations for a rate cut remain unchanged. Global factors such as US inflation, government shutdowns, and supply chain disruptions are adding to market uncertainty. In this economic environment, Bitcoin may see an influx of safe-haven assets, but smaller altcoins remain vulnerable to sudden declines.
UK inflation rate remains stable at 3.8% despite mixed price trends
The UK’s annual inflation rate was stable at 3.8% in September, the third month in a row, according to the latest data from the Office for National Statistics. This level is below the 4% peak that the Bank of England had previously predicted, but is still well above the central bank’s target of 2%. Core inflation, which excludes volatile factors such as energy, food, alcohol and tobacco, rose 3.5%, down slightly from August’s 3.6%.
Price movements in specific sectors contribute to the overall picture. Gasoline and airfare prices eased compared to last year but still drove up inflation, while prices for recreational and cultural activities, food and non-alcoholic beverages fell more modestly. These contradictory trends indicate that inflation may be nearing its peak, but with slow productivity growth and stable wage growth, it is likely to remain high for some time.
The economic context adds further complexity. The UK economic growth rate in August was only 0.1%, indicating a stagnation in the growth environment. This combination of moderate but persistent inflation and weak growth puts the BoE in a difficult position as it considers the possibility of further interest rate adjustments.
“The combination of disappointing productivity and persistent wage growth risks entrenching high inflation in the UK,” said George Brown, senior economist at Schroders. “We expect the Bank of England to keep interest rates on hold until the end of 2026, and we do not rule out the possibility that the next round of rate increases could be higher.”
Matthew Ryan, head of market strategy at global financial services firm Every, said: “We are not holding back on a November rate cut; we see a rate cut as fundamentally unlikely. The market currently sees a December rate cut as likely, but we are not completely convinced yet and think higher inflation could prevent further easing until at least February.”
In reality, the market currently sees a December interest rate cut as more likely than a November one, but some believe that rising inflation may prevent further easing until early 2026.
Impact on cryptocurrencies
Continued high inflation and uncertainty surrounding the Bank of England’s policy could increase short-term volatility in cryptocurrencies, especially in a market already nervous due to the escalation in US-China trade tensions and the recent selloff caused by Donald Trump’s announcement of 100% tariffs on imports from China. The announcement sparked widespread panic, with around $19 billion in leveraged positions liquidated within hours. Ethereum (ETH) and various altcoins also suffered double-digit losses.
At the same time, the United States is dealing with higher-than-normal inflation, a prolonged government shutdown, and ongoing supply chain issues. All of this increases global uncertainty and affects all markets, including cryptocurrencies. Looking ahead, while safe-haven inflows into Bitcoin (BTC) and other established tokens are likely to increase, small-cap altcoins may remain particularly vulnerable to sudden declines.
