UBS: Bank of England expected to keep interest rates unchanged and shrink its balance sheet in a more gradual manner

Odaily Odaily UBS expects the Bank of England to decide to keep the bank rate unchanged by a vote of 7 to 2, with Dingla and Ramsden in favor of a rate cut. "It is very likely that the Bank of England will stop actively selling UK gilts in the next fiscal year and reduce its balance sheet in a more gradual way." UBS continues to expect the Bank of England to cut interest rates again in November and pause in December. However, UBS adjusted its expectations for 2025 and now expects a 150 basis point cut to 3.25% by the end of 2025, from 3.00% previously. UBS currently expects that the practice of quarterly rate cuts will be maintained until August 2025 before the start of a series of rate cuts (previously expected to start a series of rate cuts from May 2025 to reach 3.00% by December 2025). UBS pointed out that due to recent changes in energy prices, the overall inflation rate is currently expected to return to 2% only in October 2025, rather than in early 2025. (Jinshi)