Political wobbles, dovish BoE, rebound in activity won’t last

6th February 2026

The dovish surprise at this week's Bank of England meeting, including the downward revision to the Bank's GDP growth forecasts despite the recent rebound in activity, leaves us more confident in our long-held view that interest rates will fall from 3.75% now to 3.00% this year. But if Starmer and/or Reeves were replaced by a less fiscally prudent top team, looser fiscal policy could mean rates don't fall as far.

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