We think the balance will tip in favour of a 25 basis point rate cut to 3.75% on Thursday 18th December. But it will be close. And with Bank Rate now within the Bank’s 2-4% estimate of the neutral interest rate, the Bank will probably slow the pace of rate cuts in the first half of 2026. That said, with GDP growth set to remain below trend and inflation to fall further, we still think the Bank will cut rates to 3.00% in 2026, below the low of 3.50% priced into the financial markets.
We’ll be discussing the outlook for Bank of England, Fed and ECB policy in a 20-minute online Drop-In at 3pm on 18th December (register here).
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