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.
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
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.
SPONSORED
More on UK Savings & Interest Rates
ALL UK SAVINGS & INTEREST RATES COVERAGE →Get the market digest by email
One email each morning: yesterday's key story and what it means for markets. Free.