Finance
Markets expect UK interest rates to bottom out at 3.0% in Q1 2027, BoE survey shows
Published by Global Banking & Finance Review®
Posted on February 6, 2026
2 min readLast updated: February 6, 2026
Home > Finance > Markets expect UK interest rates to bottom out at 3.0% in Q1 2027, BoE survey shows
Quick Summary
The Bank of England survey suggests UK interest rates will decrease to 3.0% by March 2027, with financial markets expecting further rate cuts in 2026.
UK Interest Rates Projected to Drop to 3.0% by March 2027, BoE Survey Reveals
Bank of England's Interest Rate Projections
LONDON, Feb 6 (Reuters) - Investors polled by the Bank of England expect the central bank to steadily cut its main Bank Rate to a low of 3.0% by its March 2027 meeting, down from 3.75% after Thursday's interest rate decision, a survey showed on Friday.
Monetary Policy Committee Decisions
Policymakers on the Monetary Policy Committee voted 5-4 to keep borrowing costs at 3.75% but signalled further cuts ahead if an expected fall in inflation looks like it will last.
Financial markets are almost fully pricing in two more quarter-point rate cuts in 2026 following that decision, according to LSEG data, but do not see rates falling to 3%.
The BoE conducted its quarterly Market Participants Survey from January 21-23 and received responses from 92 people.
Market Participants Survey Insights
The survey showed expectations for BoE quantitative tightening in the 12 months from October were unchanged at a median 50 billion pounds ($68 billion), the same as when the survey was last published by the central bank in November.
Expectations for Gilt Yields
The Market Participants Survey also showed the median expectation for 10-year gilt yields was for them to finish 2026 at 4.25%, compared with 4.0% in the last survey.
($1 = 0.7361 pounds)
(Reporting by Suban Abdulla; editing by David Milliken)
Key Takeaways
- •BoE survey predicts UK interest rates will drop to 3.0% by March 2027.
- •Current rates are at 3.75% following a recent decision.
- •Monetary Policy Committee voted 5-4 to maintain current rates.
- •Financial markets anticipate further rate cuts in 2026.
- •Survey shows unchanged expectations for BoE quantitative tightening.
Frequently Asked Questions about Markets expect UK interest rates to bottom out at 3.0% in Q1 2027, BoE survey shows
1What is the Bank Rate?
The Bank Rate is the interest rate at which the central bank lends money to commercial banks. It influences the overall interest rates in the economy, affecting borrowing and spending.
