BoE Expected to Cut Interest Rates Below 4% for First Time Since Early 2023, Goldman Sachs

The Bank of England could lower interest rates to 3.75% next week, marking the first move below 4% since January 2023, according to analysts at Goldman Sachs.

The Monetary Policy Committee kept the base rate at 4% last month, but the investment bank now predicts a narrow 5–4 vote in favour of a cut on Thursday — which would be the sixth reduction in just over a year.

Goldman said inflation has cooled faster than expected, citing an unexpected fall in food prices despite headline CPI holding at 3.8%. However, it warned that Chancellor Jeremy Hunt’s 26 November budget — expected to include tax rises — could slow the economy by reducing consumer spending power.

The Bank faces a delicate balancing act, trying to steer inflation back toward its 2% target without dampening growth further. High rates help curb price pressures by discouraging borrowing and spending, but policymakers may now look to support activity amid signs the economy is losing momentum.