The Bank of England’s MPC cut the benchmark rate by 25bp to 4.75%. This was fully expected by analysts and markets. The vote was split 8-1, with only Mann dissenting, Rabobank’s Senior Macro Strategist Stefan Koopman notes.

The next cut to 4.50% to commence in February

“The theme of gradualism remains key. Governor Bailey gave no spoilers, but we continue to interpret this as a quarter per quarter. We expect the next cut to 4.50% in February.”

“The MPC thinks the Budget adds to both growth and inflation, so it can’t cut interest rates too quickly or by too much. That said, it also thinks inflation will be under control with Bank rate falling to 3.7% by the end of 2025.”

“We also forecast Bank rate ending up at 3.75% in late 2025.”