Bank of England to cut interest rates next week, economists forecast

Bank of England to cut interest rates next week, economists forecast

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The Bank of England is expected to cut interest rates next week in what would be a welcome move for buyers, sellers, and of course, estate agents.

UK estate agents have already reported more buyer interest since summer following the BoE rate cut in August, with buyer enquiries increasing significantly in recent weeks.

The Bank cut interest rates from 5.25% to 5% in August, which was the first drop in more than four years.

UK inflation fell to 1.7% in the year to September, the lowest rate since April 2021.

The drop in the rate was larger than expected thanks in part to lower airfares and petrol prices – economists had predicted a 1.9% fall.

It also means inflation is now below the Bank of England’s 2% target, paving the way for interest rates to be cut further next week.

Financial markets have been pricing in a interest rate cut for the UK at the next Bank of England on 7 November, with all 72 economist in a Reuters poll taken 22-28 October forecasting that BoE will cut its Bank Rate by a quarter-point next week to 4.75%.

But while the Bank is facing growing pressure to also cut interest rates in December as wage growth slows, almost near-two-thirds of respondents expect no interest rate move in December, suggesting the BoE will stick to a cautious approach.

“Favourable inflation data in the interim between meetings has likely strengthened confidence among committee members that inflation is on a sustainable trajectory to target,” said Ellie Henderson, economist at Investec. “We don’t think it will mean that the MPC will call victory on inflation just yet though… there are still some upside risks.”

Among 16 Gilt-Edged Market Makers, a majority of 11 expected the MPC to hold rates in December, while five expected a cut. Interest rate futures are pricing in reductions in both November and December.





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