Bank of England Could Cut Rates by Six Times, Goldman Sachs Predicts

The Bank of England could deliver as many as six interest rate cuts by mid-2026, according to new projections from Goldman Sachs. The investment bank anticipates that rates will fall to 3.25 percent by the second quarter of 2026, citing weaker economic activity and decreasing inflationary pressures.

Goldman Sachs’ forecast comes amid growing market expectations that the Bank of England will implement two interest rate cuts this year. Economists predict that the central bank could begin this process as soon as its next meeting in February, potentially setting the stage for a steady pace of quarterly cuts throughout 2025.

Last year, the Monetary Policy Committee (MPC) made two rate cuts, lowering the key rate from 5.25 percent to 4.75 percent amid faltering economic growth. Goldman Sachs suggests that the market may not be anticipating enough cuts, projecting that sluggish demand and a continued drop in inflation will prompt the central bank to take more decisive action.

The new projections are supported by recent economic data, including a lower-than-expected GDP growth figure of just 0.1 percent for November, along with a significant decline in services inflation to 4.4 percent in the past month. Private sector surveys have also shown signs of a weakening labor market, with unemployment at 4.4 percent and job vacancies falling to their lowest levels since mid-2021.

Alan Taylor, a new member of the Bank of England’s MPC, recently indicated his openness to more aggressive rate cuts. He suggested that reducing rates by five or six times could help guide the UK economy toward a “soft landing.”

The Bank of England has been adjusting interest rates to curb inflation, which reached record highs last year. However, the economic environment has shifted, with inflationary pressures easing and growth slowing, leading to speculation that the central bank could take a more dovish stance in the coming months.

As the economic landscape evolves, the market and policymakers will be closely watching the MPC’s next moves. If Goldman Sachs’ forecast proves correct, the Bank of England’s series of rate cuts could provide much-needed relief for consumers and businesses, though some concerns remain about the long-term impact on economic stability.