At its last policy meeting, the Bank of England still sounded a long way from being assured that inflation and wage growth will continue to ease. As a result, we doubt the recent moves in global financial markets will be enough to persuade the Bank to cut interest rates again, from 5.00% to 4.75%, at its next policy meeting on 19th September. That said, our view that CPI inflation will spend most of 2025 and 2026 below the 2.0% target explains why we think interest rates will fall to 3.00% by the end of next year, rather than to 3.50% as investors anticipate.
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