The Bank of England is widely expected to cut interest rates by 0.25 percentage points to 4.25% at its meeting next Thursday. However, economists remain divided over whether the Monetary Policy Committee (MPC) will signal a quicker pace of rate reductions.
UBS economist Anna Titareva anticipates a 25 basis point cut on 8 May, followed by two additional cuts later in the year, as the MPC weighs the global economic impact of new US tariffs.
While she expects the Bank to stick with its “gradual and careful” approach, Titareva cautions that a sharper-than-expected slowdown in growth could prompt policymakers to consider rate cuts at every meeting rather than quarterly.
Barclays economist Jack Meaning also expects the Bank of England to cut rates next week, forecasting an 8–1 vote in favour. He predicts that MPC member Swati Dhingra will push for a larger 50 basis point cut, taking the Bank Rate down to 4%.
Alongside the rate decision, the Bank will release updated forecasts for GDP growth and inflation. Meaning anticipates a downward revision to the inflation outlook, suggesting the risks have shifted toward a less inflationary environment.
“We think this will open the door to a June cut without explicitly referencing it, to retain optionality,” he said.
While services inflation remains persistent, a more dovish tone from typically hawkish MPC member Megan Greene—who described tariffs as disinflationary—could indicate broader support for easing, added UBS’s Anna Titareva.
Titareva expects the Bank Rate to fall to 3.75% by year-end, with three additional cuts in 2026 bringing it to a terminal level of 3.0%.
Dani Stoilova, economist at BNP Paribas Markets, also sees an 8–1 vote as the most likely outcome, with the Bank maintaining its guidance for a gradual policy approach. However, she noted that continued uncertainty both domestically and internationally will likely prompt the MPC to emphasise that there is “no pre-set path for policy.”
“Given the current backdrop, we think this would imply optionality to accelerate the pace of rate cuts,” Stoilova said.
She projects quarterly 25 basis point reductions, with a terminal rate of 3.50% reached by Q1 2026, but warned of “growing risks of an acceleration as early as next month.”
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