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UK interest rate held at 16-year high

UK interest rate held at 16-year high
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Respected Capital Economics analysts have released a fresh projection that indicates inflation and interest rates may decline more than the market has anticipated.

Similar to the markets, Capital believes that base rate reductions from the present 16-year high of 5.25% to 5% will start in June (some experts believe May).

However, Capital predicts that rates will drop to 3% in 2025, while the markets believe they will bottom out at 3.5–3.75%.

Its forecast is hooked on the idea inflation will go lower than people are talking about at the moment.

“Our forecast [is] that CPI inflation will fall below 1.0% later this year,” Capital says.

“We think rates will fall further than current market pricing. If we’re right in thinking that inflation will drop below the Bank’s 2% target in April and subsequently remain low, then the markets will likely come round to our view that the Bank will have to cut rates back to the neutral level of about 3% by the end of 2025 to avoid activity and inflation being too low.”

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Dulal Ahmed Chowdhury

Dulal Ahmed Chowdhury is the Editor of The Daily Dazzling Dawn. Previously, he has been serving in important positions in all the famous national dailies of the Bangladesh since the nineties. He has played a commendable role in journalism by participating in various events at the national and international levels. United Nations Conference, World Climate Conference, SAARC Summit are notable among them.

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