The Bank of England is expected to hold interest rates steady this quarter, with 34 of 63 economists backing the move. Meanwhile, inflation is forecast to decline to 3.6% this quarter, averaging 2.5% in 2026 and 2.1% in 2027—signaling a return toward price stability.
In a notable shift from September’s expectations, a majority of economists now anticipate the Bank of England will maintain its benchmark interest rate this quarter. This comes amid improving inflation forecasts, suggesting the UK economy may be entering a phase of gradual normalization.
Key Developments:
-
Rate Outlook: 34 of 63 economists surveyed expect the BoE to hold rates steady, while 29 foresee a single cut—down from broader expectations of at least one cut in the September survey.
-
Inflation Trends: The BoE projects inflation to fall to 3.6% this quarter, with further moderation to 2.5% in 2026 and 2.1% in 2027.
-
Policy Implications: The tempered inflation outlook may reduce urgency for aggressive rate cuts, allowing the BoE to adopt a more measured approach.
-
Economic Sentiment: Stabilizing prices could support consumer confidence, though global uncertainties remain a key risk factor.
This evolving macroeconomic landscape suggests cautious optimism, with policymakers balancing inflation control against growth concerns.
Sources: Bank of England, Reuters, Bloomberg.