Morgan Stanley, an investment bank, forecasts that the Bank of England is set to reduce interest rates by May, which should benefit those with mortgages.
They expect a drop in rates to 4.25 percent by the close of the next year due to the expected decline in food and basic goods prices. Additionally, the analysts at the bank foresee the UK entering a technical recession by year’s end, with a slight contraction of 0.1 percent in 2024, followed by a 1 percent expansion in 2025.
The speculation about a rate cut in May follows comments from Huw Pill, the Bank of England’s chief economist, suggesting that predictions of a rate decrease in the next summer might be justified.
The Bank decided to maintain the interest rates at 5.25 percent during its last two meetings, after a series of 14 rate hikes from a starting point of 0.1 percent in 2021.
The latest inflation data for October is expected soon, and it is widely anticipated that the consumer prices index will drop under 5 percent, aligning with Prime Minister Rishi Sunak’s commitment to halve inflation by the year’s end, which requires it to be below 5.3 percent.
