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2026-11-02 13:08:31
[Goldman Sachs Adjusts Bank of England Interest Rate Forecast: Expects Rate Hike to 4.25% in February 2027] (1) Goldman Sachs expects the Bank of England to raise interest rates by 25 basis points in February 2027, bringing the final rate to 4.25%; it also expects the Bank of England to raise rates by 25 basis points next week and keep rates unchanged in December. (2) Given rising energy prices and positive economic data, Goldman Sachs now expects the Bank of England to raise interest rates by 25 basis points in February next year. The Bank of England is scheduled to hold a meeting on November 5, and the market generally expects it to raise rates by 25 basis points; money market pricing shows that the probability of this move is about 92%. This will be the first rate hike by the Bank of England since 2023. (3) Goldman Sachs expects the Bank of England to maintain its policy guidance unchanged and reiterate that policymakers are prepared to take action if necessary to bring inflation back to the target level. Goldman Sachs still predicts that interest rates will remain unchanged in December, but said on Friday evening that it now believes that a rate hike in February next year is more likely. (4) Goldman Sachs added that it expects the Bank of England to keep interest rates unchanged at 4.25% until the middle of next year, and then cut rates quarterly starting in the fourth quarter of 2027 until the rate eventually remains unchanged at 3.25%. (5) Goldman Sachs said that persistently high energy prices have made the Bank of England eager to avoid repeating the mistakes of misjudging inflation risks in the past; but unlike the last inflation shock, the Federal Reserve and the European Central Bank have taken the lead in raising interest rates.
