Barclays has become the latest major institution to forecast that the Bank of England will cut interest rates next week, arguing that the City is underestimating the likelihood of a move.
Jack Meaning, UK chief economist at Barclays, now expects the Monetary Policy Committee (MPC) to vote 5–4 in favour of a 0.25 percentage point cut, bringing the base rate down to 3.75% at Thursday’s meeting.
In a note to clients, he wrote:
“Back in September, the committee was weighing up the balance of risks on both sides of its inflation outlook. We think the data since then, as well as signals of future fiscal policy changes, will have shifted that balance, leaving the committee more confident that disinflation is underway.”
Goldman Sachs and UniCredit have issued similar forecasts, with UniCredit noting that while the decision will likely be “finely balanced,” there remains a high risk the MPC majority could prefer to wait.
Current market pricing suggests only a 25% probability of a cut this week, though traders assign a 60–65% chance of one by the end of the year.
Recent data has strengthened the case for monetary easing. Headline inflation held at 3.8% in September, 0.2 percentage points below the BoE’s forecast. The unemployment rate has climbed to 4.8%, up 0.7 points year-on-year, while private-sector wage growth — though still high — has eased below the Bank’s projections.
Economists say these indicators suggest the UK economy is cooling faster than expected, increasing pressure on the MPC to begin loosening policy after one of the most aggressive tightening cycles in decades.
