Goldman Sachs revises BoE call and expects rate cut in November

Goldman Sachs said on Tuesday it expects the Bank of England (BoE) to cut interest rates by 25 basis points in November, after last week’s weaker-than-expected inflation data and signs of labor market tensions.

UK consumer inflation hit 3.8% in September, below the central bank’s forecast of 4%, raising the prospect of a rate cut in November.

Goldman, in September, said it expected the BoE to hold rates steady through 2025 before starting to ease in 2026, “However, since then, the information coming in has been much weaker than expected.”

They added that they expect the UK budget, announced next month, “to provide a major contractionary boost to the economy.”

Wall Street brokers now anticipate that the BoE will lower its quarterly Bank Rate to 3% in July 2026 from the current 4%.

Current market estimates suggest around a 40% chance of a 25 basis point BoE rate cut in November, but around a 70% chance of a rate cut in November or December.

Leading brokerages, including JPMorgan and Morgan Stanley, previously predicted no further rate cuts this year after the BoE left its key interest rate unchanged in September.
Source: Reuters