After a nail-biter in December, January’s interest rate decision is shaping up to be just as close. The Monetary Policy Committee (MPC) seems pretty certain that rates need to fall significantly further and will be keen not to “fall behind the curve”. But inflation risks mean that it might still prefer to take a gradual approach to loosening policy. We think it marginally more likely that the MPC waits until February. But the fast-moving economic and financial situation means that the balance could easily tip towards an immediate cut, as occurred just before December’s meeting. Either way, we think rates will eventually fall as low as 4%.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services