BOE to cut 4 times in 2025

Investing.com – As expected, interest rates were unchanged on Thursday, however Deutsche Bank (ETR:) expects the U.K. central bank to announce four rate cuts next year, in a more delayed cycle.

The decision to keep the bank rate unchanged at 4.75% was largely telegraphed, but analysts at the German bank also expected a unanimous vote, with three dissenters instead calling for an imminent rate cut.

“Dingra, Ramsden and Taylor all voted for an immediate lifting of some policy restraints, citing sluggish demand and a weakening labor market,” Deutsche Bank said in a Dec. 19 note.

“For most MEPs, however, a gradual easing of policy restraint was still the preferred path, especially given this week’s stickier price and wage data. In short, the split in today’s vote marked the pivot for the doves.”

In addition, the economic outlook highlighted the competitive risks facing the Bank of England’s Monetary Policy Committee.

On the one hand, growth momentum has slowed significantly, although whether that reflects weaker demand or supply remains to be determined, the bank said.

On the other hand, progress in domestic disinflation has been modest and in some cases stalled, with price growth expected to pick up in the near term. with the pace.

Third, uncertainty continues to reign in. Uncertainty about the economic outlook will only increase from here. The MPC is now struggling both internally and externally

risks mainly due to the uncertainty of the autumn budget, as well as geopolitical and trade policy uncertainty.

“H1-25 (February) we see only one rate cut. And we expect the MPC to deliver three-quarters of a point of rate cuts in the 2-25 semester as unemployment exceeds the MPC’s estimate of the NAIRU (4.5%), wages decline to target consistent levels, and services inflation resumes a stronger downward trend,” the bank added, with the bank rate around 3% in Q1-26 be defined.