At least two major investment banks are advising clients that the Bank of England will cut interest rates again next Thursday.
Barclays predicted a 5-4 vote in favour of a 25 basis point rate cut to 3.75% at the bank's monetary policy committee meeting next week.
"Back in September, the committee was weighing up the balance of risks on both sides of its inflation outlook. We think the data since then, as well as signals of future fiscal policy changes, will have shifted that balance, leaving the committee more confident that disinflation is underway,” economist Jack Meaning wrote in a note.
He highlighted that money markets may be underestimating the likelihood of a reduction in borrowing costs. Traders currently assign just a 27% probability of a cut from the current 4%.
Barclays said the decision remains finely balanced, with “equally valid arguments” for keeping rates on hold.
Other major banks have also flagged the potential for easing. Goldman Sachs reiterated its forecast for a cut yesterday, making a U-turn based on services inflation below the MPC’s forecasts, cooling private sector pay growth and softer GDP data.
Deutsche Bank described the MPC vote at the 6 November meeting as a “very close call” and BNP Paribas predicted a narrow 5-4 to deliver a "dovish rate hold".
BNP said the MPC "remains firmly divided on the appropriate pace of cuts, there is a consensus that the cycle is not yet over, in our view".
The French bank sees a December cut as likely, and envisions a terminal Bank Rate of 3.5% being reached by the end of the first quarter of 2026.