Experts Predict December Rate Cut by Bank of England

Morgan Stanley, Citigroup, and UBS expect the Bank of England to cut interest rates in December, following a steady inflation rate and cooling labor market signs. A potential rate cut reflects shifting viewpoints after the BoE previously maintained a cautious path. Traders anticipate a 25-basis point reduction.

Morgan Stanley, Citigroup, and UBS Global Research have joined Goldman Sachs in forecasting that the Bank of England will likely cut interest rates in December. This prediction came shortly after the central bank decided to keep rates unchanged in its latest policy meeting.

Britain's inflation rate of 3.8% remains above the central bank's target but has not increased, while the labor market shows signs of cooling. The BoE's Monetary Policy Committee narrowly voted to hold rates steady at 4%, signaling a potential shift toward a gradual decrease if disinflation continues.

Citigroup analysts suggested that upcoming economic decisions are largely in the hands of Governor Andrew Bailey, who may support a December rate cut, contingent on future economic data and the Autumn Budget. Traders are betting on a significant chance of a 25-basis point reduction, with further cuts anticipated in early 2024.

(With inputs from agencies.)