Despite the recent weak news on activity and the uncertainty around the global outlook due to Trump’s US import tariffs, the stronger news on domestic price pressures means the Bank of England will probably continue to cut interest rates only gradually. But while CPI inflation may rebound from 2.5% in December last year to around 3.0% later this year, we think a fall to below 2.0% next year will prompt the Bank to cut interest rates from 4.75% now to 3.50% by early 2026, rather than to 3.75-4.00% as investors anticipate.
We’ll be discussing the outlook for UK interest rates in a 20-minute online Drop-In at 3pm GMT on Thursday 6th February. (Register here.)
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