There is likely to be a pre-Christmas boost for millions of households and prospective property buyers next week, with interest rates expected to be cut again.
The Bank of England is widely forecast to reduce its base rate from 4% to 3.75%, and mortgage lenders have already been trimming their rates in anticipation. Money markets now imply a greater than 90% chance of a December rate cut to 3.75%.
Markets also expect two further cuts in 2026, with the possibility of a third, signalling a gradual easing cycle ahead towards 3% in 2026.
The Monetary Policy Committee voted 5-4 to leave rates unchanged earlier this month, with BoE Governor Andrew Bailey casting the deciding vote, wanting to wait for evidence of declining inflation before committing to a cut.
Goldman Sachs economist James Moberly told This is Money: “We maintain our view that the MPC, which decides interest rates, is very likely to cut the bank rate in December, followed by three more cuts to 3% next summer.”
All eyes will now turn to Bank of England governor Andrew Bailey, who is due to speak on Wednesday. His comments will be closely scrutinised ahead of the MPC’s rate decision on 18 December.
Economics 101…
Lower interest rates “stimulate” the economy by persuading people to borrow more.
Given the state of the economy at the moment, that will lead to simple price inflation. The cost of living will go up again.
It will NOT lead to a sustainable improvement in the economy.
Instead, it will allow wealthy people to get even wealthier and the bankers to cream of arrangement fees.
Reducing the Bank of England Base Rate is a sign of weakness.
This is not a “boost to the economy” move, rather it’s a “Dear God, we’re f**ked!” move.
Happy Christmas everyone!
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