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Goldman Sachs expects the BoE to cut rates by 25bp in March, June and September 2026
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Goldman Sachs predicts three rate cuts by the BoE in 2026 amid economic weakening.
Goldman Sachs Predicts BoE Rate Cuts in 2026
Goldman Sachs forecasts that the Bank of England (BoE) will cut interest rates by 25 basis points in March, June, and September 2026. This adjustment from earlier predictions reflects a cautious approach as economic data suggests weakening in the UK economy. The December rate cut marked a significant shift in the BoE's policy, indicating a move towards more sustained easing amid easing inflation pressures and deteriorating labor market conditions. Market implications are significant, as faster rate cuts could pressure the pound while supporting UK risk assets. This evolving landscape highlights a clear transition in BoE policy.AI Analyst
AI Opinion
"The direction of BoE's monetary policy is heavily contingent upon the UK's economic health and inflation trajectory. While markets are currently pricing in a gradual easing cycle, actual data may prompt a reevaluation. Particularly if labor market instability and inflation moderation intensify, the BoE may adopt a more aggressive approach to rate cuts. Consequently, this could lead to a softer pound, providing support to UK risk assets. Investors need to remain vigilant for upcoming economic data reflective of these trends, while also keeping an eye on the actions of other global central banks as they could add further dynamics to the market."
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