Goldman Sachs forecasts that the Bank of England will start reducing interest rates from May, a strategy expected to save households around £11bn by the end of next year.
The prominent Wall Street firm anticipates that the policymakers will implement rate cuts of 0.25 percentage points at each meeting starting in May to bolster the economy.
The bank projects these reductions to persist until the rates reach 3pc by May 2025.
Goldman Sachs also estimates that the total increase in mortgage payments, resulting from the Bank’s decision to elevate rates to a 16-year peak of 5.25pc, will amount to £19bn by the end of 2025. This figure is £11bn lower than its earlier projection of around £30bn, leading to an improved growth forecast for the UK economy from 0.5pc to 0.6pc in 2024, and from 1pc to 1.3pc in 2025.
Furthermore, the bank suggests that the highest surge in mortgage payments is expected to occur in the first half of this year, sooner than previously thought.
Current predictions in the money markets align with this view, suggesting that the Bank of England will start lowering interest rates from May, with expectations pointing to a decrease to 3.75pc by the year’s end.
