Economists See Bank of England Cutting Rates in December and Early 2026

A Reuters poll of 61 economists taken between November 13 and November 18 showed 48 respondents, nearly 80 percent, expected the Bank of England to trim Bank Rate by 25 basis points to 3.75 percent at the central bank's December 18 meeting. The remaining economists in the survey forecast no change for December. The same poll indicated a substantial share of forecasters anticipate an additional cut to 3.50 percent in the first quarter of 2026.

The results marked a clear shift from the October survey when 54 percent of economists expected rates to remain unchanged for the rest of the year. The change in sentiment reflects recent data showing inflation continuing to cool. UK consumer price inflation eased to 3.6 percent in October, a key data point that poll respondents cited as supporting scope for policy loosening in the months ahead.

Markets typically react quickly to shifts in official rate expectations. Although the poll did not measure market moves directly, a credible path of rate reductions could put downward pressure on short dated gilt yields, reduce the cost of new borrowing for households on variable or tracker mortgages, and relieve some of the interest burden on corporate finance. For savers the prospect of cuts could mean lower returns on cash deposits. The timing and magnitude of any market response will depend on the Bank of England's own communication and the incoming flow of economic indicators, including wage growth and services price trends.

Policymakers at the Bank have repeatedly stressed the need to be data dependent. The poll highlights a growing consensus among outside forecasters that disinflation will proceed sufficiently to allow easing. Economists who expect cuts are implicitly betting that supply and demand conditions in the UK will continue to relieve inflationary pressure without prompting a setback that would force the Bank to hold rates higher for longer.

The wider economic context matters. After a period of elevated inflation that prompted unusually aggressive tightening, the UK economy has shown mixed signs of cooling. A move to 3.75 percent in December would represent a first shift in policy direction for many households and businesses, and a follow up cut to 3.50 percent would signal that monetary policy has pivoted to support growth rather than restrain demand.

Fiscal policy and global developments will also influence the Bank's choices. With inflation still above the Bank's 2 percent target, any decision to cut will require careful weighing of upside risks. For consumers and firms planning investment or refinancing, the poll offers a tentative signal that borrowing costs may ease next year, but the ultimate path of interest rates will hinge on the sequence of inflation readings and the Bank's interpretation of economic momentum.