Goldman Sachs Abandons December Rate Cut Expectations from BoE

Goldman Sachs expects the Bank of England (BoE) to maintain interest rates in December, revising its forecast for a 25 basis point cut following what it describes as a "broader expansionary" UK budget.

Goldman Sachs economists stated, "Expectations for stronger growth in 2025 may reduce the urgency for consecutive cuts in the near term. While there remains a possibility for a cut due to potential significant downside surprises in data—especially inflation—from now until December, we believe a pause is now more likely."

Considering previous communications and faster-than-expected progress in inflation, Goldman Sachs continues to anticipate a 25 basis point cut at the BoE's November meeting, followed by a series of cuts starting in February, predicting that the bank rate will fall from 2.75% to 3% by November.

Additionally, Goldman Sachs has raised its GDP forecast for the UK in 2025 from 1.5% to 1.6%, projecting a modest increase in inflation due to stronger demand linked to GDP growth.