Goldman Sachs sees BoE rate cuts delayed until 2027
Goldman Sachs delayed its Bank of England rate cut forecast to 2027 due to inflation risks. The bank warned of potential hikes if energy prices continue rising.
The Goldman Sachs Group, Inc. has significantly revised its interest rate outlook for the United Kingdom, now projecting that the Bank of England will delay policy easing until 2027. This adjustment follows the central bank's decision to maintain current borrowing costs while highlighting persistent inflationary risks linked to geopolitical instability in the Middle East. Goldman Sachs had previously anticipated a cycle of quarterly rate cuts beginning in July, but the firm now foresees a much more gradual path toward a 3% terminal rate, with the first move not expected until next year.
The Bank of England recently held its benchmark rate steady at 3.75%, warning that headline inflation could climb to approximately 3.5% over the next two quarters. Policymakers emphasized their commitment to monitoring price stability, noting the importance of preventing high inflation expectations from becoming permanent fixtures in the economy. The ongoing conflict in the Middle East and the effective closure of the Strait of Hormuz have triggered a surge in global oil prices, complicating the disinflationary process across Europe.
