Interest rates unlikely to reach 4.75% by next summer, say City economists
News Source
β’Sun, 25 Oct 2026 12:00:05 GMT
π° What Happened
City economists think markets are too gloomy about UK interest rates. Traders expect the Bank of England to raise rates four times, from 3.75 percent now to 4.75 percent by July. Some bet on 5 percent by December 2027. Economists say that is unlikely. They see little sign that higher energy costs are pushing other prices up sharply. The Bank is expected to raise rates to 4 percent next month.
π The Backstory
The Bank of England moves rates to keep inflation near 2 percent. Higher rates make mortgages and loans costlier, but they cool rising prices. Market forecasts come from the prices of financial instruments, not from a vote. James Smith of the bank ING said few people really agree with the market view. He thinks the Bank could sound more upbeat by spring and cut rates by late 2027.
π― Why It Matters
Rate moves decide what millions pay on mortgages and loans. If forecasts run too high, borrowers may worry more than they need to.
City economists think markets are too gloomy about UK interest rates. Traders expect the Bank of England to raise rates four times, from 3.75 percent now to 4.75 percent by July. Some bet on 5 percent by December 2027. Economists say that is unlikely. They see little sign that higher energy costs are pushing other prices up sharply. The Bank is expected to raise rates to 4 percent next month.
The Bank of England moves rates to keep inflation near 2 percent. Higher rates make mortgages and loans costlier, but they cool rising prices. Market forecasts come from the prices of financial instruments, not from a vote. James Smith of the bank ING said few people really agree with the market view. He thinks the Bank could sound more upbeat by spring and cut rates by late 2027.
Rate moves decide what millions pay on mortgages and loans. If forecasts run too high, borrowers may worry more than they need to.