Revising down peak Bank Rate from 5.00% to 4.50%

With fiscal policy no longer expected to be ultra-loose and some signs emerging that domestic price pressures will ease further ahead, we no longer expect the Bank of England to raise interest rates to a peak of 5.00%. Our new forecast of an increase from 3.00% to a peak of 4.50% is similar to that priced into the markets but is a bit higher than the peak of 4.25% envisaged by the consensus. Our view in 2024 is different to the market and the consensus in that we expect interest rates to be cut further.