The Bank of England will cut the base rate to around 3 per cent by late 2025, according to the latest forecasts.
That would be a substantial decline from the current 5.25 per cent, but would still represent rates rising like a rocket and falling like a feather.
Since December 2021, when it stood at 0.1 per cent, the Bank of England has upped the base rate on 14 consecutive occasions.
The market expectation around where base rate will peak appears to be constantly changing with every new slice of economic data that filters through.
Inflation, wage growth and unemployment are all factors that could impact what happens to the base rate in the future.
At present, markets appear to think that base rate has now peaked at 5.25 per cent.
Sixty-one out of 73 economists in the poll, conducted between 18 to 23 October, said they believed the Bank’s Monetary Policy Committee (MPC) would not raise rates next week, in line with market expectations, or any further.
Only 12 economists forecast a quarter point rise to 5.50% at the November MPC meeting.
The current assumption by Capital Economics is that now that rates have peaked, they will be held for about a year.
It predicts interest rates will stay at their peak for a long time, perhaps until mid to late in 2024, before they begin to be cut. They predict the base rate will be cut to around 3 per cent by the end of 2025.
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