Finance
HSBC, Deutsche Bank push back BoE rate cut forecasts as inflation clouds outlook
Published by Global Banking and Finance Review
Posted on September 8, 2025
2 min readLast updated: January 22, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on September 8, 2025
2 min readLast updated: January 22, 2026
HSBC and Deutsche Bank delay BoE rate cut forecasts due to inflation concerns, affecting UK economic outlook and market stability.
(Reuters) -HSBC and Deutsche Bank on Monday pushed back their forecasts for Bank of England rate cuts, citing persistently high inflation and growing uncertainty over the timing of monetary easing.
HSBC expects the BoE to keep interest rates steady until April 2026, shifting from its earlier view that the central bank would lower rates every quarter starting from August 2024.
Its sees the Bank Rate reaching 3.00% by February 2027, while the current benchmark rate stands at 4%.
Deutsche Bank also delayed its call for the next rate cut to December from November, saying the narrow 5-4 vote at the August policy meeting revealed deep divisions on the Monetary Policy Committee and that Governor Andrew Bailey may prefer to wait until year-end
"There is now considerably more doubt about exactly when and how quickly we can make those further steps," Bailey told a hearing of the House of Commons' Treasury Committee, earlier this month.
Both banks said incoming data through year-end will be crucial for policy. UK markets have been unsettled by stubborn inflation and mixed BoE signals, keeping investors cautious.
Last month, data showed British inflation hit an 18‑month high in July, the fastest pace among the world’s largest rich economies.
Deutsche Bank said the timing of the Autumn Budget, set for Nov. 26, makes a December move more likely. It added that November is not entirely off the table, but the odds favour December unless labour market data weakens sharply.
The next policy decision is scheduled for 18 September 2025, and traders are betting on no change, with LSEG data showing a 96.75% probability that the Bank of England will hold rates steady.
(Reporting by Rashika Singh in Bengaluru; Editing by Tasim Zahid)
HSBC now expects the Bank of England to maintain interest rates until April 2026, a shift from its previous forecast of quarterly rate cuts starting in August 2024.
Deutsche Bank delayed its call for the next rate cut to December, citing a narrow 5-4 vote at the August policy meeting which indicated deep divisions within the Monetary Policy Committee.
Recent data showed that British inflation reached an 18-month high in July, making it the fastest pace among the world's largest rich economies, which has unsettled UK markets.
The next policy decision from the Bank of England is scheduled for September 18, 2025, with traders currently betting on no change in rates.
Both HSBC and Deutsche Bank emphasized that incoming data through the year-end will be crucial for shaping future monetary policy, particularly amidst persistent inflation.
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