City economists: Bank of England won't raise rates to 4.75% by summer
Economists say financial markets overestimate how much the Bank of England will tighten policy, predicting rates stay below 4.75% and could fall by late 2027.
SOURCE: The Guardian ↗
What This Means
Economists have revised down expectations for the Bank of England's terminal rate, signaling confidence that inflation will not force rates to the levels previously anticipated. This shapes gilt yields, sterling positioning, and mortgage pricing, as markets reprice the path of monetary tightening and the duration of restrictive policy.
Markets since first report
Daily closes from the day before this was first reported to the latest close. Prices move for many reasons; shown for context, not as cause and effect.
Sources (1)
Every claim below links directly to the original reporting it was drawn from. Penblock synthesizes and cross-references these sources — it doesn't originate the reporting.
- The GuardianOct 25, 2026Read the original report at The Guardian ↗
How This Could Play Out
First assessed Oct 25 · Reviewed Nov 5, no change
Resolved
LIKELYGilt yields fall and sterling weakens as markets reprice the terminal rate lower and bring forward rate-cut expectations.
Status quo
POSSIBLEGilt curve flattens as the market consensus drifts toward the economist view without a sharp repricing event, leaving sterling and mortgage rates range-bound.
Worsens
UNLIKELYGilt yields rise and sterling strengthens if inflation data forces the Bank of England to signal a higher terminal rate than economists now expect, contradicting the dovish revision.
More on UK Savings & Interest Rates
- Bank of England's chief economist signals more rate increases aheadNov 14
- Nationwide offers 5.3% savings rate ahead of Bank of England rate riseNov 7
- UK rate rise to lift mortgage costs for millions of borrowersNov 7
- Bank of England lifts rates to 4% for first time since 2021Nov 5
- Bank of England poised to lift rates to 4% for first time since 2020Nov 5
- Bank of England poised to lift rates as UK services surge to eight-month peakNov 4
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