Financial markets anticipate that the Bank of England will lower interest rates by a full percentage point to 4.25% in the upcoming year.
Following data indicating the economy contracted in October, market participants are wagering on four rate cuts in 2024.
Expectations are now set for a decrease from the current 15-year peak of 5.25% to 4.25% by the end of next year.
Moreover, traders foresee the Bank of England commencing the reduction of borrowing costs from these 15-year highs by May, an advancement from the previously predicted June start.
This shift in expectations arises as authorities are urged to stimulate the economy, especially after the Office for National Statistics reported a 0.3% decline in the UK’s gross domestic product (GDP) for October.
In light of these developments, major Wall Street institutions like Goldman Sachs and JP Morgan have revised their UK growth projections downwards.
The Bank of England is scheduled to make its forthcoming interest rate announcement this Thursday.
