(Bloomberg) -- Goldman Sachs said it now expects the Bank of England to take a slower approach to interest-rate cuts after the UK budget lifted the outlook for both growth and inflation.
Economists at the US bank said the BOE will cut once every quarter next year rather than a reduction every meeting, in a revised view after UK Chancellor Rachel Reeves unveiled plans for higher borrowing and spending.
The note showed City of London economists are increasingly coalescing around a gradual cutting cycle from the BOE after the fiscal plans were unveiled. It would still be more aggressive than the 50 basis points of cuts predicted by markets by the end of 2025.
“The autumn budget points to more near-term growth and inflation than anticipated,” said James Moberly, economist at Goldman. “That said, we continue to think that the BoE will ultimately cut notably further than the current market pricing of 4% for the terminal rate.”
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