Goldman Sachs has revised its forecast for the Bank of England’s (BoE) terminal interest rate down by 25 basis points to 5.5%. Previously, they had predicted that the central bank would raise interest rates at its November meeting, but now they anticipate the BoE will hold rates steady.
In early August, the BoE increased its key interest rate by 0.25 percentage points to 5.25%, reaching a 15-year high. This was the fourteenth consecutive rate increase, and the central bank cautioned that borrowing costs were likely to remain high for a significant period.
Economists led by Sven Jari Stehn, in a note dated Friday, still expect the BoE to raise rates by 0.25 percentage points at its September Monetary Policy Committee (MPC) meeting, which is scheduled for next week.
Looking ahead to the November meeting, they believe there is a greater likelihood that sequential wage and price pressures will have cooled down by then. This could lead the MPC to decide to hold interest rates steady, especially considering their preference for a more gradual and “flatter” peak in interest rates.