City economists say Bank of England unlikely to raise rates as much as markets expect
Financial markets are pricing in more interest rate rises than economists believe will occur over the next year and beyond.
At a glance
- Financial markets expect at least four Bank of England rate rises over the next year
- Market pricing suggests the bank rate could reach 4.75% by end of July and possibly 5% by December 2027
- City economists believe these market expectations are too aggressive
City economists dispute market expectations that the Bank of England will raise interest rates by a full percentage point or more by next summer. Financial markets are currently pricing in at least four rate rises over the next year, which would lift the bank rate from its current level to 4.75% by the end of July, with the possibility of reaching 5% by December 2027.
Economists argue these market-implied expectations overestimate the scale of future rate increases the Bank is likely to implement.
Why it matters
Interest rate forecasts influence investment decisions, borrowing costs and economic planning across the UK financial system.
Original reporting
- The Guardian — WorldInterest rates unlikely to reach 4.75% by next summer, say City economists
- The Guardian — BusinessInterest rates unlikely to reach 4.75% by next summer, say City economists
This brief was written with AI assistance from the reports listed above and checked against our editorial policy. Spotted an error? Request a correction.
