MNI BRIEF: NIESR Sees 3.75% Trough For BOE Bank Rate

The Bank of England will make two further policy rate cuts this year, and one more in 2026, with the trough at 3.75%, the National Institute of Economic and Social Research predicted in its latest forecasts.

NIESR had previously forecast a 4.0% trough but it stuck to its broad theme, that persistent inflation will prevent rapid or extensive easing despite sluggish grow. NIESR predicted that inflation on the target CPI measure would average 3.3% in 2025 while the economy would grow by 1.2% this year.

The tepid growth will lead to the government missing both its fiscal goals, one which stipulates that the current budget must be within a range of 0.5% of GDP of balance within three years when 2029-30 becomes year three of the forecast, and another that states debt must fall as a share of GDP by 2029-30. NIESR warned that further spending cuts or tax hikes to meet the fiscal goals would add to uncertainty and lower investment and growth.