Bank of England's Rate Projected to Decline

The latest survey from the Bank of England (BoE) reveals a consensus among market participants: the interest rate is expected to decrease to 3.25% by April 2026. This projection comes as part of the BoE's August Market Participants Survey report, highlighting a gradual easing of monetary policy in the coming years.

Interest Rate and Inflation Forecasts

By the end of 2025, the majority anticipate the rate will stabilize at 3.75%, with a further reduction to 3.25% a year later. This level is expected to persist for several years, reflecting a cautious approach to economic recovery. Currently, the BoE's key interest rate stands at 4%.

Inflation is also a key focus, with predictions suggesting a decrease from 3.3% at the end of this year to 2.9% by the first quarter of 2026. These figures indicate a slow but steady move towards the BoE's target inflation rate.

Quantitative Tightening Expectations

Additionally, the survey sheds light on quantitative tightening, with participants forecasting a median of £72 billion over the 12 months starting October. This move is part of broader efforts to normalize monetary policy in response to evolving economic conditions.