How to read a Bank of England Monetary Policy Report
The Bank of England publishes its Monetary Policy Report four times a year. This guide explains what to read first, how the fan charts work, and which forecasts matter most for understanding UK inflation.
The Bank of England's Monetary Policy Report (MPR) — formerly called the Inflation Report — is published four times a year, in February, May, August, and November. It contains the MPC's economic projections, analysis of inflation drivers, and the reasoning behind rate decisions. Reading it well helps you understand not just where the BoE thinks inflation is heading, but what evidence would change its mind.
The MPR is longer and more detailed than the FOMC's Summary of Economic Projections — it runs to 50–80 pages and includes detailed fan charts, scenario analysis, and box articles on specific economic questions. This guide shows you which sections to prioritise and how to interpret the key visualisations.
Start with the Executive Summary and key judgements
The first three pages of every MPR summarise the MPC's central view: where inflation is relative to the 2% target, what drove recent deviations, and the central projections for CPI, GDP, and unemployment. The "key judgements" box explicitly states the main analytical calls the committee has made — for example, "wage growth is expected to moderate as labour market slack increases" or "energy base effects will pull down headline CPI in Q2."
These judgements are the hypotheses to test against incoming data. If the November MPR projects services CPI falling to 3.5% by mid-2027 and the actual data comes in at 4.0%, the BoE's central scenario is being challenged and a rate hold or hike becomes more likely. The BoE publishes the full MPR alongside the rate decision on the same day.
Read the fan charts — they show uncertainty, not just a forecast
The BoE's inflation and GDP fan charts are their most distinctive and frequently misunderstood feature. The fan chart shows a probability distribution around the central forecast — the darker shading in the middle represents the 50% probability interval; the lighter outer shading represents the 90% interval. The chart is not saying "we predict exactly X" but "we think there is a 50% chance inflation will be within the dark band."
Key things to read in the fan chart: (1) Is the fan symmetric (balanced risks) or skewed (asymmetric risks)? If the shading is wider on the upside, the BoE thinks upside inflation risks dominate. (2) Is the central projection above or below the 2% target in two years? The BoE constructs projections "conditioned on" market interest rate expectations — if inflation is below target in two years on market rates, it implies those rates are too high and cuts are warranted. The BoE publishes a guide to using fan charts.
Decompose the inflation projection into its drivers
Section 3 of the MPR ("Inflation") breaks down projected CPI into its major components: energy, food, goods, and services. Each section explains the BoE's assumptions about near-term developments and longer-run dynamics. The core inflation section is particularly important — it shows how the BoE expects services and goods inflation to evolve independently, driven by domestic wages and global supply respectively.
For practical use: if you disagree with one of the BoE's component assumptions — for example, you think energy prices will fall faster than assumed — you can mentally adjust the headline projection accordingly. The component breakdown makes the MPR a more useful analytical document than a single-number point forecast. Cross-reference the services inflation projection with the ONS services CPI series to judge whether the BoE's assumption is on track.
Check the conditionality and alternative scenarios
MPR projections are "conditioned" on a specific assumption about interest rates — typically the path implied by market interest rate futures at the time of the report. This means the projections are not unconditional forecasts of where inflation will be; they are forecasts of what inflation would be IF rates followed the market path. If you think rates will be higher or lower than markets imply, you should adjust the projection accordingly.
The MPR also typically includes "alternative scenarios" — box articles exploring what would happen under different assumptions (for example, "stronger energy price disinflation" or "persistent wage growth"). These scenarios reveal the MPC's key uncertainties and sensitivity analysis. They are often where the most important analytical insights are — read them before the minutes if you want to understand the range of thinking on the committee. Our central bank decision guide covers how the MPR connects to the actual rate vote.
Watch the Governor's press conference
The MPR is published simultaneously with the Governor's press conference. Andrew Bailey's tone and answers to journalists' questions can shift market interpretations of the written document. Key phrases to watch: "we remain vigilant on services inflation" (hawkish); "risks are more balanced now" (pivot signal); "the path back to target is not assured" (no cuts imminent).
The BoE livestreams the press conference and publishes the transcript. After the press conference, read the MPC minutes (published the same day) to understand the vote split and the arguments made by individual members. Dissenting votes are the clearest signal of the direction of the next move.