The Bank of England is set to start cutting interest rates in June, according to a City A.M. poll of economists, as inflation nears its target, the labour market cools and the UK takes its first steps out of recession.

Some 61% of the 23 economists surveyed thought the Bank would start cutting rates in June, narrowing their bets since last month’s survey.

Just 9% projected that rate cuts would start in May, compared with 43% last month, while just over a quarter – 26% – chose August.

Just under half of the economists – 48% – expected the bank would cut rates three times in 2024, with some placing more optimistic bets for four (30%) and five cuts (9%).

The Bank’s Monetary Policy Committee is due to meet on Thursday 21 March for its next rate-setting vote. The benchmark Bank Rate currently stands at 5.25%.

Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, told City A.M.: “While the expectation is that interest rates will remain on hold this month, with the economy struggling and inflation slowing, the case for loosening policy by the summer is growing.”

Julian Jessop, economics fellow at the Institute of Economic Affairs, added: “4% would be a good level for interest rates in the longer term, broadly consistent with two per cent inflation and two per cent growth in the real economy.

“Anything much lower than this would be a worrying sign that the UK is at risk of Japanese-style stagnation. Anything much higher would suggest that inflation is a bigger problem.”