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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

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(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)