UK interest rates will drop to 2.75%, Goldman Sachs predicts

The Bank of England could move more aggressively to lower borrowing costs; good news for mortgage borrowers.

The Bank will cut interest rates from the existing level of 5% down to 2.75% next year, predicts Goldman Sachs.

The Wall Street investment bank expects monetary policy to catch up with lower inflation.

Goldman Sachs analysts said that interest rates are “notably restrictive” at the present level of 5% and will decline to 2.75% by November 2025.

The move is much faster than the pace priced in by money markets, which suggest the Bank Rate will drop to 3.5% over the next year.

Inflation in Britain fell faster than expected in September to 1.7%, following comments from governor Andrew Bailey that rate setters on the Monetary Policy Committee (MPC) would become “more aggressive” about reducing borrowing costs.

Goldman Sachs said interest rates would fall to lower than the levels priced in by money markets amid “rapidly falling inflation and dovish MPC commentary”.

The news would be a welcome boost to mortgage borrowers, who have faced a sharp rise in costs after interest rates were raised to 5.25% to combat inflation which surged to 11.1% in October 2022.

If Goldman’s prediction is correct, it would mean the Bank of England would make consecutive quarter of a percentage point interest rate cuts at each of its next nine meetings.

Other articles

News

🏡 Bank of England Cuts Base Rate to 4.5% – What It Means for the Property Market

The Bank of England has announced a base rate reduction to 4.5%, marking a significant shift in monetary policy. This long-awaited cut is expected to ...
Read More →
News

A Step-by-Step Guide to Buying a Home in Tetbury

Tetbury, nestled in the heart of the Cotswolds, is a charming market town renowned for its historic architecture, vibrant community, and proximity to stunning countryside. ...
Read More →
News

UK Property Market Update – January 2025

The 2025 property sales market has started stronger than both 2024 and 2023: Regional Trends: Market Trends: Key Figures: The market is showing positive momentum, ...
Read More →
News

🌟 Cirencester Ranks 9th Among UK’s Most Popular Towns on Rightmove 🌟

We’re thrilled to share some exciting news for Cirencester! According to a recent report by Rightmove, our charming market town has been ranked 9th among ...
Read More →
News

Upcoming Changes to Stamp Duty (From 1st April 2025)

Stamp Duty Land Tax (SDLT or Stamp Duty) is a tax payable to HM Revenue and Customs (HMRC) when buying a property or land in ...
Read More →
News

UK Inflation Surges to 2.3% in October: The Largest Monthly Increase in Two Years

The UK inflation rate jumped to 2.3% in October, a significant rise from 1.7% in September, marking the largest monthly increase in two years. This ...
Read More →