While the economy lost all momentum at the end of last year, we still expect GDP to grow by an above-consensus 1.3% in 2025. Admittedly, activity could be restrained if the increase in gilt yields is sustained as borrowing costs would be higher than otherwise and fiscal policy would be tighter than currently planned. But this would mean interest rates need to be lower. Indeed, we think a fall in CPI inflation to below 2.0% in 2026 will prompt the Bank of England to cut interest rates from 4.75% now to 3.50% by early 2026, rather than to 4.25% as investors anticipate.