The Bank of England is expected to restart its easing cycle with a 25 basis point rate cut in March, according to a majority of economists in a Reuters poll.
February’s decision to keep rates at 3.75% by a 5–4 vote surprised markets with a dovish tone, reinforcing expectations that a cut could be imminent.
But with inflation still above the 2% target and expected to remain around 2.5% at the end of the year, economists are divided on when a second cut will be made. In general, they expect it to be in the second quarter or second half of this year.
The median forecast is for rates at 3.25% by the end of the year, although there are mixed views among analysts and gilt market makers.
January inflation is expected to ease to 3.0%, but the BoE warned that underlying pressures remain high and inflation risks remain tilted to the upside.
With Britain's economy barely growing in the fourth quarter of 2025 and 2026 growth expected to be modest, central banks face a dilemma between supporting growth and controlling inflation.
