Budget means Bank of England won’t cut rates as fast and as far

While cutting interest rates from 5.00% to 4.75% today, the Bank of England implied that the Budget means rates will continue to fall only gradually. We agree and due to the Budget (and not the US election), we have concluded that rates will fall slower to only 3.50% in early 2026 rather than to 3.00%. This still implies that rates fall below investors’ expectations of a low of 4.00%.

We will be discussing the outlook for Bank policy and the financial markets in a 20-minute briefing at 3pm GMT today. (Register here.)

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