EU, Major Event

BoE Interest Rate Prep

ING: We expect a 25 bps rate cut from the BoE. We expect a 6-3 vote in favour of a rate cut this Thursday

MUFG: The BoE’s MPC will likely cut by 25bps, which again is fully priced. The decision is unlikely to be unanimous with Catherine Mann set to dissent. We see scope for the MPC to signal increased confidence on receding inflation risks that will signal more cuts to come that may lower yields but with limited FX impact.

Morgan Stanley: We anticipate that the BoE will implement five interest rate cuts in 2025, starting with a 25 bps cut at the MPC meeting on February 6th, 2025. This initial cut is expected to lower the base rate from its current 4.75% to 4.5%. Subsequent cuts are projected throughout the year, potentially bringing the rate down to 3.5% by year-end.

Goldman Sachs: We think that the BoE will implement a series of interest rate cuts, beginning with a 25 bps reduction at the upcoming meeting, followed by quarterly cuts throughout 2025 and into 2026. We project that the BoE’s base rate will reach 3.25% by the second quarter of 2026. This outlook is based on expectations of slowing inflation and weaker economic growth, which would provide the BoE with the impetus to ease monetary policy over the coming years.Probability:

January 17th 2025:
BoE’s Taylor: Pre-emptive cuts make sense

January 15th 2025:
Traders boost chance of BoE cut in February to 80% from 60%.

BoE’s Taylor: My base case on rate cuts is around 100 bps this year.

BoE’s Taylor: It’s time to get interest rates back toward normal to sustain a soft landing.

January 6th 2025:
BoE’s Dhingra: We should be easing policy more

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