Here’s a snapshot of Bank of England base rate forecasts as of early July 2025: The current BoE base rate stands at 4.25%, after a 0.25 ppt reduction
📊 Current Rate & Recent Cuts
The current BoE base rate stands at 4.25%, after a 0.25 ppt reduction in June and another 0.25 ppt in May 2025.
🔮 Market & Analyst Predictions for 2025
Markets anticipate two more quarter-point cuts by end-2025, edging the rate down to 3.75%, roughly one point below current levels.
Santander forecasts four cuts in 2025, bringing rates to 3.75% by year-end.
Morgan Stanley and Barclays paint a similar picture: 3.5% by late 2025.
Goldman Sachs projects a more aggressive path: nine successive 0.25 ppt cuts—reducing the rate to 2.75% by November 2025.
🏛 BoE Policymakers’ Perspective
MPC member Alan Taylor expects five cuts in 2025, advocating for a rate near 2.25% by late 2026 under downside conditions.
Governor Andrew Bailey flags ongoing economic uncertainties and keeps the tone cautious—but acknowledges a gradual declining rate path, with cuts likely in August and November.
Also Read : UK Interest Rate Forecast for Next 5 Years
📅 Forecast Timeline Snapshot
| Timeframe | Market Median | Bank Analysts (Santander/Morgan Stanley) | Morgan Stanley / Barclays | Goldman Sachs | Alan Taylor (MPC) |
|---|---|---|---|---|---|
| Now | 4.25% (current) | 4.25% | 4.25% | 4.25% | 4.25% |
| End 2025 | 3.75% | 3.75% | 3.5% | 2.75% | 3.75% (5 cuts) |
| Late 2026 | — | 3.75% (through 2026) | — | — | ~2.25% (downside scenario) |
🧭 Summary
Near-term outlook: Two further quarter-point cuts expected by year-end, taking the base rate to around 3.75%.
By end-2025: Depending on the forecaster, the rate could drop to 3.5%–3.75%, or, per Goldman, as low as 2.75%.
Longer-term: Taylor of the MPC sees the downside path going deeper (~2.25% by late 2026) if economic growth weakens significantly.
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