Citi Expects Three More Bank of England Rate Cuts This Year
Citi still expects the Bank of England to cut interest rates three more times this year, following a rise in unemployment.
The Wall Street bank said the Monetary Policy Committee (MPC) is likely to continue with a “gradual and careful” approach. It predicts rate cuts in August, November, and December, lowering the base rate from its current 4.25% to 2.75% by mid-2026.
Citi economist Michel Nies said the latest data points to a stagflationary trend, with inflation rising to 3.7% in June, the economy shrinking in May, and the labour market starting to weaken.
He noted that the deterioration in job data could be a stronger signal than the inflation figures, which temporary factors may distort. However, he added that the loosening in the labour market isn’t yet strong enough to convince a majority of MPC members to support back-to-back cuts starting in September.
