Synopsis:

Barclays anticipates the Bank of England’s Monetary Policy Committee (MPC) will implement a 25bps rate cut at the November meeting, bringing the Bank Rate to 4.75%. With updated macro projections likely showing an inflation undershoot by 2027, Barclays expects further rate cuts beyond November.

Key Points:

• Rate Cut Expectation: Barclays forecasts a 25bps cut to 4.75%, marking the second cut in the cycle, with an expected 8-1 vote split. Hawkish member Catherine Mann is likely to dissent, voting for a hold.
• Inflation Outlook: The MPC’s updated projections are anticipated to show an inflation undershoot for 2027, reflecting the likelihood of further rate cuts.
• Policy Implications: The inflation undershoot signals the BoE’s expectation for additional easing beyond November to achieve long-term inflation goals.

Conclusion:

Barclays expects the BoE to proceed with a 25bps cut and maintain a dovish outlook, with projections indicating a need for further rate reductions in the coming years to meet inflation targets. An 8-1 vote split with a hawkish dissent is anticipated, signaling cautious easing amid subdued inflation forecasts.