UK economists expect Bank of England rate to remain unchanged until mid-2027
In the United Kingdom, the Bank of England will keep its base rate at 3.75% until the end of the year and at least until mid-2027, according to the median forecast of economists surveyed by Reuters. All 65 respondents to the survey conducted on September 4–8 expect the Monetary Policy Committee to leave the rate unchanged at its September 17 meeting, Cyprus Mail reports.
Fifty-seven of the 65 economists, or nearly 90%, forecast that the rate will remain unchanged until the end of the year. Another eight respondents expect it to rise to 4% by the end of the year. At the July meeting, three of the nine Monetary Policy Committee members voted to raise the rate, compared with two such votes previously.
Inflation and energy prices
Economists believe that higher energy prices amid the ongoing US and Israeli war against Iran may have further delayed the prospect of rate cuts in the United Kingdom until late next year. Brent oil futures are again approaching $100 per barrel, but there are still no signs that higher energy costs have already affected inflation in the economy.
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The latest inflation reading was 2.9%, compared with the Bank of England's 2% target. Goldman Sachs senior economist James Moberly suggests that inflation could peak at 3.3% in November. In his view, this is unlikely to trigger concerns about second-round inflation effects.
Next rate decision
The median forecast of respondents suggests that the Bank of England's next move will be a 0.25-percentage-point rate cut in the third quarter of 2027. This is later than participants in the August survey expected. At the same time, financial markets are pricing in three rate hikes by mid-2027, with the first expected in November.
Rising global bond yields in recent weeks have tightened overall financial conditions and may increase mortgage rates. According to the latest survey, average inflation will be 3.1% this year, 2.5% in 2027, and 1.9% in 2028. Economic growth is expected at 1.1% in 2026, 1.2% in 2027, and 1.5% in 2028.
