Rate cuts may come sooner than the BoE implies

While leaving interest rates at 5.25% for the fourth meeting in a row today, the Bank of England sent a signal that the next move will be a cut, but it pushed back strongly against the idea that rates will be cut soon or far. Our forecast that inflation will fall further and faster than the Bank expects suggests it will change its tune in the coming months. A rate cut in June is still possible and we think rates will end 2025 at 3.00%. That’s lower than current market pricing of 3.25-3.50%.

We’ll be discussing the outlook for Fed, ECB and Bank of England policy in a 20-minute online briefing at 3pm GMT today. (Register here.)