📝Four BoE 2025 Rate Cuts Remains Our Base Case: ING

Much like the Federal Reserve and European Central bank, the BoE is unlikely to be drawn much on what it’ll do next. Expect its policy statement to simply reiterate that further gradual easing is likely, without any comments about timing. Four rate cuts this year feels like the Bank’s base case, and that's our thinking too. But don’t ignore the risk of more aggressive easing later this year. Markets have a tendency of lumping the BoE in the same category as the Fed, despite the macro story looking increasingly different in the UK.

Services inflation, the most critical indicator for the BoE, fell sharply in December. That may be a temporary blip – and it’ll likely bounce to 5% in January – but the trend is undoubtedly down. We expect it to slip below 4% in the second quarter, and the progress is likely to look even better when volatile/less relevant categories are excluded.

Faster cuts aren’t our base case, but they remain more likely than a Fed-style pause later this year. - ING