Tag: Interest Rates

ECB Keeps Interest Rates on Hold

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The ECB today joined the Federal Reserve and the Bank of England in a unanimous decision to hold its benchmark deposit rate at 2.00%, where it has remained since June 2025. Analysts advise that policymakers will wait and assess the impact on growth and inflation as the Middle East conflict drags on. Experts suggest that the ECB is well ahead of its peers with inflation just about on target and with interest rates at 2.00%, which gives them headroom to adjust to on-going outside pressures.

The President of the ECB, Christine Lagarde, has said the ECB is well placed to handle war risks. She added, “We are both well positioned and equipped to deal with the development of a major shock that is unfolding and we are going to continue what we have been doing.” Analysts confirm that ECB appears to be in a better position than when Russia invaded Ukraine, and in response to reporter’s questions on the subject, she said, “In those four years, we have learned, we have improved our models, we have changed our strategy and we are now more attentive to risks around the outlook.” 

Inflation Risks and Economic Skew

Officials of the ECB noted that, “War will have a material impact on near-term inflation through higher energy prices. Its medium-term implications will depend both on the intensity and duration of the conflict and on how energy prices affect consumer prices and the economy.” President Lagarde also noted that inflation is somewhat skewed to the upside, whilst conversely risks for the economy are skewed to the downside. It is worth also noting that a spike in prices could be reinforced by disruption to global supply chains, faster wage growth and higher inflation expectations. 

Energy Security and Supply Chain Vulnerabilities

Analysts have warned that the ECB should not be too complacent in regard to potential energy shocks that could impact inflation, because if the war goes on for a few more weeks, there will be a scramble for LNG. Europe is at a seasonal low for gas storage, and with Asia struggling for gas supplies the result could be a head-to-head competition between Asia and Europe keeping prices elevated. Experts advise that even if the war ended tomorrow, it would take a long time to get supply chains back to normal. 

Market Forecasts and Inflation Swaps

Money markets have priced-in two full 25-basis point increases by the ECB by October this year, with the first rate increase expected sometime during the summer. Driven by surging energy costs, short-term inflation expectations have shifted sharply higher, with one-year euro inflation swaps* doubling to 4.00% today from sub-2.00% levels earlier this year. Policymakers at central banks around the world are expected to remain vigilant and the IMF (International Monetary Fund) have advised policymakers to stay nimble. 

*One-year Euro Inflation Swaps – An OTC (over-the -counter) derivative contract used to transfer risk, where one party pays a fixed rate (the swap rate) and the other party pays a floating rate linked to realised Eurozone inflation over a one-year period. These swaps are typically based on the Eurostat Harmonized Consumer Prices (HCIP)** excluding tobacco.

** HCIP (Eurostat Harmonized Consumer Prices excluding tobacco) – A specialised consumer price index (inflation measure) that covers all goods and services in the standard HCIPM basket excluding tobacco products, specifically targeting the removal of price changes relating to smoking. It acts as a sub-aggregate designed to measure inflation while excluding the direct, often policy-driven price fluctuations of tobacco. 

The Federal Reserve Keeps Interest Rates on Hold

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Today, the FOMC voted 11–1 to maintain its benchmark interest rate at 3.50%–3.75%, marking the second consecutive meeting of unchanged policy. The one dissenting vote came from Governor Stephen Miran, who called for a rate reduction of 25 basis points. Policymakers acknowledged that due to the Iranian conflict in the Middle East, they now face increased uncertainty on how this will impact the economy, with Chairman Powell stating in a post-meeting press conference, “The thing I really want to emphasise is that nobody knows.”

Inflation Outlook and Rate Cut Criteria

On the inflation front, officials have raised their outlook in 2026 from 2.40% to 2.70%, still above the Federal Reserve’s target of 2.00%, and analysts point to the fact that inflation figures have been above target for the last five years. Chairman Powell advised that they need to progress in reducing inflation in order to lower interest rates, saying that, “If we do not see that progress, then we won’t see the rate cut.” He went on to point to goods inflation that had increased due to tariffs, and indeed officials pointed to core inflation (excludes food and energy prices) which they also indicated will rise to 2.70%.

Energy Volatility and Meeting Deliberations

In the post-meeting press conference, Chairman Powell was questioned on rising oil prices. He noted that policymakers typically look through energy spikes, as such fluctuations often have only a transient impact on long-term inflation. The Chairman also advised that the possibility of a rate hike was discussed at some stage, but was quick to point out that most members of the FOMC did not see this as their base case. As usual, President Trump had called for a rate cut, but with the current events in the Middle East and current inflation figures, this seemed hardly likely to be on the FOMC’s agenda which of course was borne out by their vote. 

Market Expectations and the “Dot Plot”

Financial markets had priced in a near 100% bet that the FOMC would hold rates this time around. Currently, consensus pricing reflects a 94% to 95.7% probability of another hold at the upcoming April meeting. Experts suggest that money market sentiment will be only one more 25 basis points this year, most likely in either September or December. The FOMC uses the “Dot Plot”* as a major guide to future interest rate decisions, and currently analysts advise that consensus has shifted toward higher-for-longer with 14 of the 19  members now predicting no change or just one cut.

*Dot Plot – This is a chart that is published by the Federal Reserve that shows where each FOMC member expects interest rates to be in the future, with each dot representing one policymaker’s projection as to where the Federal Funds rate will be at the end of any given year, with the median dot receiving the most attention. Financial markets read and assess the implications of the dot chart and if the median dot shifts higher, then it may be interpreted as a hawkish stance. If it moves lower, it can be interpreted as a dovish stance. 

Leadership Succession and DOJ Investigation

Finally, and in a surprising statement regarding his immediate future, Chairman Jerome Powell stated that he had no intention of resigning as a member of the Federal Reserve’s Board of Governors until the investigation by the DOJ (Department of Justice) into the Fed’s building renovation is over. He went on to state that his Chairmanship ends this May, and if his already presidential nominated successor (Kevin Warsh) is not confirmed by the Senate by the end of his term, he will stay on as a chair pro tempore. In the past, the Federal Reserve has approved such a nomination. As one Senator has promised to withhold his vote until the DOJ investigation is dropped, no doubt this will increase President Trump’s angst towards Chairman Powell.

The Reserve Bank of Australia Hikes Interest Rates

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Today, the RBA (Reserve Bank of Australia) raised its key interest rate by 25 basis points from 3.85% to 4.10%, with the nine-member policy committee voting by 5 – 4 in a split decision. In 2023, officials delivered three rate cuts, and today’s first back-to-back rate hike since 2023 reverses two of those three cuts. After the vote, Governor Michelle Bullock advised that the Iranian conflict in the Middle East represented part of the decision to hike rates, but pointed out that prices still remained too high.

The Deputy Governor of the RBA, Andrew Hauser, has already echoed the Governor’s words in a statement last week when he advised that price rises driven by the Iranian conflict would not be helpful in combating inflation. Experts suggest that a rise in interest rates was on the cards, and perhaps the on-going conflict in the Middle East fuelled the debate as to whether to hike interest rates now or at the next policy meeting.

In February this year, officials from the RBA had forecasted that the CPI (Consumer Price Index) would peak at 4.2%, this was partly based on the technical assumption that crude oil would remain at circa $63.8pbl through to 2028, but today, Brent Crude is trading between $103pbl – $104pbl. However, the Treasurer of Australia, Mr James Chalmers, has announced that he anticipates inflation rising to 4.5% and that households can expect increased cost of living expenses. Today, he went on to say that Australia already had an inflation challenge, but the war in the Middle East is making this challenge worse. 

Many experts and analysts are expecting another 25-basis point hike in May, and if the Iranian conflict is still going on and oil surpasses the $150pbl mark, the increase could be even higher. Elsewhere in Indonesia, BI (Bank Indonesia) held its benchmark interest rate (BI-Rate) at 4.75%  marking a continued stance of stability amid the on-going Middle East conflict and other geopolitical and geo-economic unrest. However, the Middle East conflict has brought Asia and South East Asia to the forefront of the oil crisis and only time will tell how their economies will react.

The ECB keeps Interest Rates on Hold

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The ECB (European Central Bank) recently announced that for the fifth consecutive policy meeting, it was keeping interest rates on hold at 2.00%. Following the meeting, officials noted the economy’s resilience but offered no forward guidance on interest rates, stating instead that future decisions will be strictly data-dependent. 

The Three Key Interest Rates Explained

The ECB manages its monetary policy through three distinct interest rates. First is the key deposit rate, which—as previously noted—was held at 2.00%; this is the interest rate commercial banks receive when they deposit money overnight with the ECB. The second facility is the Main Refinancing Operations (MRO) rate, maintained at 2.15%, which represents the interest banks pay when they borrow funds from the ECB for a one-week duration. Finally, the Marginal Lending Facility was held at 2.40%; this is the rate banks must pay when borrowing from the ECB on an overnight basis. President Christine Lagarde said the ECB would not commit to a particular path for the rate and would maintain its meeting-by-meeting approach and its reliance on data.

Inflation Outlook and Economic Resilience

Data released last Wednesday confirmed that inflation had cooled to below the ECB’s 2.00% target, sitting at 1.7% as of the 31st of January 2026. President Lagarde said, “Our rate decisions will be based on our assessment of the inflation outlook and the risks surrounding it.” ECB officials also advised, “Inflation should stabilise at its 2% in the medium term. The economy remains resilient in a challenging global environment. Low unemployment, solid private sector balance sheets, the gradual rollout of public spending on defence and infrastructure and the supportive effects of the past interest rate cuts are underpinning growth.”

Trade Risks and Growth Constraints

However, future growth may be dragged down, as cautioned by Executive Board Member Piero Cipollonne, who noted last week that there was an increased risk scenario whereby tariffs could curb investment and bring down growth. President Lagarde also noted that challenges still remain, even though the region’s fiscal boost could fuel quicker-than-anticipated growth. She went on to say, “Further frictions in international trade could disrupt supply chains and reduce exports and weaken consumption and investment”.

Currency Fluctuations and Market Sentiment

Market experts indicate that recent rhetoric from the ECB suggests the Governing Council is broadly satisfied with the current state of the economy, inflation levels, and interest rate positioning. There may be some concern that the Euro has broken through the $1.20 threshold, as it was sitting at $1.1812 not long before, and global investors have taken a more cautious stance regarding U.S. assets. Officials have advised they are keeping a close watch on the currency’s advance, with the Governor of the Banque de France, Villeroy de Galhau, noting that the currency’s path will help guide future decisions. Analysts advise that financial markets have adopted a wait-and-see policy, as some traders feel that interest rates will remain steady for the next eighteen months to two years.

Bank of England Keeps Interest Rates on Hold

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A Tight Decision on Rates

Yesterday, the BOE’s (Bank of England) MPC (Monetary Policy Committee) voted 5–4 in a tight decision to keep interest rates steady at 3.75%, the lowest level since February 2023. The four dissenting members all voted to cut interest rates by 25 basis points. Recent data for December 2025 has hinted at stickier inflation, which some analysts were not expecting. Consumer prices have also ticked higher, which experts say likely swayed the MPC’s decision into holding rates at this time. However, policymakers indicated after the meeting that they expect inflation to fall in the coming months, paving the way for further interest rate cuts.

The Inflation Outlook

BOE Governor Andrew Bailey said, “We now think inflation will fall to around 2% by the spring. That’s good news, and we need to make sure inflation stays there, so we’ve held rates unchanged at 3.75% today. All going well, there should be scope for some further reduction in bank rates this year.” The MPC advised that they expect inflation to fall much quicker than anticipated. They stated that this was due to Chancellor Reeves’ package of anti-inflation measures announced in her budget speech in November 2025. 

However, three months ago, gross domestic product (GDP) was estimated by the MPC to grow by 1.2% in 2026, but this estimate has now been revised downwards to 0.9%. Alongside weaker growth, officials advised that the outlook for unemployment remains bleak, peaking in Q2 at 5.3%, up 0.20% from the previous official notification. 

Labour Market and Future Expectations

Data released shows that across 2026, unemployment is circa 0.30% higher than originally advised, which experts say translates into 100,000 more people out of work. As mentioned above, inflation is expected to fall to 2.00% by spring this year, and officials advise that they expect the rate to stay at that figure until the start of 2029. Figures released showed inflation hitting 3.4% in December 2025, making it nearly impossible for the MPC to cut rates today. It was a much closer vote than expected, and financial markets are now confident of two 25 basis point cuts by this coming summer.

The Federal Reserve Holds Interest Rates Steady

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FOMC Holds Interest Rates Steady

Today, and for the first time since July 2025, the Federal Reserve’s FOMC (Federal Open Market Committee) kept interest rates steady between 3.50% and 3.75%. The FOMC voted 10 – 2 in favour of holding rates steady, with the two dissents coming from Governor Waller (a President Trump nominee to replace Fed Chair Powell) and Governor Miran*, both voting for a cut in interest rates of 25 basis points. Post-meeting statements by officials said, “job gains have remained low, and the unemployment rate has shown some signs of stabilisation”. Interestingly, the language that officials used in three previous statements suggested that there were increased downside risks to employment, has disappeared this time around.

Background on Governor Miran

*Federal Reserve Governor Marin – In December 2024, President Donald Trump named Miran as his nominee for chair of the Council of Economic Advisors. He was confirmed by the United States Senate in March 2025. Governor Marin developed the Trump administration’s Tariff Policy, opining that import taxes are not inflationary.

Powell Signals Improving Economic Outlook

After the interest rate announcement, Federal Reserve Chairman Jerome Powell said, “The outlook for economic activity has improved, clearly improved since the last meeting, and that should matter for labour demand and for employment over time”. Recently released data backed up this statement, showing steady employment, accelerating growth, and cooling inflation”. On the growth front, official data released last week for GDP showed an annualised growth of 4.4% for Q3 2025, with some experts suggesting it could reach 5.4% in Q4. 

Political Pressure and Inflation Concerns

Chairman Powell has also noted, “The economy has once again surprised us with its strength, not for the first time.” However, once again, President Trump has hurled insults at Chairman Powell, calling him a moron for not lowering interest rates. The President’s frustration is likely to grow, as experts say Chairman Powell’s comments clearly suggest the FOMC plans to keep interest rates on hold in the coming months. Indeed, the Federal Reserve’s Personal Consumption Expenditures Inflation Gauge, (their preferred inflation gauge),  reflected 2.8% in November 2025 which is nearly a full percentage point above their 2% target, so as some analysts have suggested, this may be another reason to keep rates on hold as the Federal reserve attempt to balance their dual mandate of full employment and price stability.

Market Reaction and What Comes Next

Analysts advise that the reaction by financial markets to the Federal Reserve’s interest rate decision was relatively muted, with traders pricing in two more rate cuts this year, the first cut being expected in June. Indeed, analysts suggest that the statement by officials following the rate decision was on the hawkish side, especially as downside risk to employment was removed from the language and economic activity was reclassified from moderate to solid. This suggests that Chairman Powell may well have presided over his last interest rate cut as he is due to retire on 15th May this year. Global markets are watching with cautious anticipation as President Trump prepares to appoint a rate-cut advocate as the next Chairman of the Federal Reserve. The two dissenters in today’s announcement are Trump appointees, and both Fed Governors are in the frame for selection.

The Bank of Japan Raises Interest Rates to Their Highest Level in 30 Years

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Interest Rate Decision and Market Reaction

Today, the BOJ (Bank of Japan) in a unanimous and widely expected decision raised its key interest rate to 0.75%, being the highest level since September 1995, whilst at the same time signalling that more interest rate increases are still to come. Experts pointed out that financial markets had predicted the increase in rates, and the yen weakened due to a lack of a stronger commitment from the central bank regarding further increases. After the rate decision, and in the usual non-committal verbiage of central bank chiefs worldwide, the Governor of the BOJ, Kazuo Ueda, said, “We’ll keep making appropriate decisions at each policy meeting, and the pace at which we adjust our rate will depend on the state of the economy and prices.”

Shift Away from Negative Interest Rates

In 2025, the central bank began abandoning negative interest rates, which had been in place since 2016, and data show that they have been gradually lifting interest rates, stating that their ambition was to see a “virtuous cycle” of rising wages and prices. The decision to increase rates came as the new Prime Minister of Japan, Sanae Takaichi, said she is keen to bring inflation down, but at the same time keeping government borrowing as cheap as possible. Interestingly, last year, before she took office, Prime Minister Takaichi described the idea of rate increases as stupid. However, since she took office in October of this year, she has not criticised the central bank governor.

Inflation Developments and Policy Constraints

Prime Minister Takaichi has made inflation her government’s priority, and recently released data showed underlying or core inflation (excluding food and energy) had increased to 3.00% in November, which is still 2.00% higher than the BOJ’s target benchmark figure. However, some financial market experts suggest that the rise in interest rates will not have a positive effect on inflation, as currency markets have already priced in the rate increase, confirming that the Japanese Yen remains relatively weak. Experts suggest that it may not be until Q3 that the BOJ hikes interest rates again due to Prime Minister Takaichi’s stand on monetary policy, plus the central bank will have to wait and see how today’s rate increase impacts the real economy*.

*The Real Economy – is defined as that part of the economy which is focused on producing, selling and consuming actual goods and services such as food, cars, haircuts, and construction that satisfy human needs. It is distinct from financial markets that trade in stocks and shares, bonds, loans, etc., that trade in money and assets.

Growth and Inflation Outlook

Experts in the Japanese economy have predicted a moderate yet stable growth of 0.60% for 2026, driven by domestic demand, ongoing corporate governance reforms and corporate investment in technology. However, some analysts have predicted that there may be a slowdown in growth from 2025 levels due to the impact of President Trump’s tariffs, plus a downturn in some other nations’ economies. On the inflation front, the BOJ has predicted that core inflation will decelerate to a range of 1.50% – 2.00%. Overall, experts and financial commentators suggest that the outlook is cautiously positive, with the economy expected to navigate a transition toward sustainable growth and mild inflation, subject to external risks and the careful management of domestic policy reforms.

European Central Bank Holds Interest Rates

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ECB Rate Decision and Market Reaction

Yesterday, the ECB (European Central Bank), for their fourth straight meeting, held its benchmark deposit rate* at 2% with the Euro essentially unchanged at $1.1740, but declined slightly against the Swiss Franc by close of business by 0.32%. The decision by policymakers was unanimous and in line with market expectations, and the President of the ECB, Christine Lagarde, was noted as saying that there had been no discussions regarding rate cuts or rises. Experts in this area say that ECB officials have indicated that, given the outlook for inflation and economic growth, quantitative easing, in the form of interest rate cuts, is likely to be finished.

*ECB Interest Rates – The ECB has three interest rates: the key deposit rate, which, as mentioned above, was held at 2.00% and is the interest rate banks receive when they deposit money overnight with the ECB. The other two facilities are the Main Refinancing Operations (rate held at 2.15%), which is the rate the banks pay when they borrow money from the ECB for one week, and the Marginal Lending Facility (rate held at 2.40%), which is the rate banks pay when they borrow money overnight from the ECB.

Inflation Outlook and Economic Uncertainty

Officials advised that they are now expecting annual inflation for 2026 to be in the region of 1.9% as opposed to their earlier prediction of 1.7%, which is due to elevated price increases in services, which will be falling more slowly than was predicted. President Lagarde followed this up by saying that the inflation outlook was more uncertain than usual due to the vagaries of the volatile international environment. Indeed, in a statement by the ECB, it was announced that an uncertain global outlook would push down growth within the eurozone, and officials renewed appeals for governments within the EU (European Union) to push ahead with reforms to make the economy more competitive and efficient.

Future Growth Drivers and Inflation Expectations

In a further announcement, President Lagarde said that in the years ahead, domestic demand will be the main engine of expansion. She went on to say, “Business investment and substantial government spending on infrastructure and defence should increasingly underpin the economy. However, the challenging environment for global trade is likely to remain a drag. Inflation should decline in the near term, mostly because energy prices will drop out of the annual rates, and it should then return to target in mid 2028, amid a strong rise in energy inflation.”

Interest Rates and Bank Rate Decisions – What They Mean for Your Loan Facility

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For any business engaging in Secured Lending through facilities like Collateral Transfer, monitoring the central bank’s Base Rate decision is paramount. The official Bank Rate set by the Bank of England (or the equivalent key rate by the ECB, SNB, etc.) is the foundation upon which your borrowing costs are ultimately built.

Understanding this link is essential for effective Contract Fee Structures and accurate financial forecasting.

The Ripple Effect of the Base Rate

The Bank Rate is the key rate that influences the cost at which commercial banks can access central bank money and short-term market funding. Changes to this rate create a direct, cascading effect across the entire financial system:

  1. Cost of Funds: When the central bank raises the Base Rate, it becomes more expensive for commercial lenders to obtain funds. This increased cost is then passed on to corporate borrowers.
  2. Benchmark Rates: Most corporate loan facilities, especially variable-rate loans, are priced as a margin (or spread) over a recognized market benchmark, such as EURIBOR or SOFR. These benchmark rates tend to move in close correlation with the central bank’s decision.
  3. Lending Appetite: Higher interest rates increase the risk of borrower default, causing commercial banks to tighten their lending criteria and potentially reduce the amount of Business Finance they offer, even for secured deals.

How the Rate Impacts Your Collateral Transfer Costs

When accessing capital through a Collateral Transfer facility, you typically face two primary, separate costs:

1. The Collateral Transfer Contract Fee (Relatively Stable)

The Contract Fee is the annual charge paid to the Collateral Provider for the use of the Bank Guarantee (BG) or Standby Letter of Credit (SBLC).

  • This fee is generally negotiated and relatively insensitive to short-term rate moves, but over longer horizons, providers may reprice in light of the rate and credit environment.
  • It is typically a fixed percentage of the collateral’s face value for the duration of the initial contract.
  • Note on Structure: While the Contract Fee is primarily influenced by market demand and the provider’s rating, structures exist (as one possible arrangement) where the fee for subsequent years is fixed as a percentage over a benchmark rate, introducing an element of market rate influence.

2. The Loan Interest Rate (Fixed or Variable)

This is the actual interest you pay on the loan or line of credit secured against the BG.

  • Variable Loans: Interest rates are often calculated as Margin + Benchmark Rate (e.g., EURIBOR). When the central bank adjusts the Base Rate, the benchmark rate usually follows, and your annual loan cost changes accordingly.
  • Secured Advantage: Because the loan is secured by institutional collateral, the margin added by the lender is typically lower when strong collateral is in place than for an unsecured loan. This is one of the key benefits of using a Bespoke Collateral Funding Solution.

IntaCapital Swiss specialises in creating sophisticated Contract Fee Structures that ensure full transparency regarding these two cost elements.

Navigating Rate Changes in International Finance

Monitoring the Bank Rate allows clients to plan the optimal time for their Loan Facility negotiation and helps inform the choice between a fixed or variable interest rate.

By utilizing high-grade collateral, you gain Risk Mitigation and access to the most competitive rates available in the market. Contact our experts today to ensure your funding package is optimally structured for the current economic climate.

Bank of England Cuts Interest Rates

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The MPC Decision and Market Reaction

In a move that saw UK interest rates fall to their lowest level in almost three years, the Bank of England (BOE) cut its benchmark interest rate by 25 basis points to 3.75% today. The decision by the nine-member MPC (Monetary Policy Committee) was reached through a close call by 5 votes to 4, with the deciding vote being given by Governor Andrew Bailey. After the decision, earlier drops by sterling and 10-year gilt yields were erased, with the pound slightly up against the US Dollar at $1.3396.

Inflation Targets and Future Borrowing Costs

Data recently released showed pressures on prices, the jobs market and economic growth all moving south, with officials from the BOE announcing that they expect inflation to fall closer to the benchmark target of 2%. Officials also announced that, based on current data, they expect borrowing costs to further decline in 2026, but cautioned that decisions on interest rates will be finely balanced as they move to what they describe as the neutral interest rate, where there is neither negative nor positive pressure on inflation.

Governor Andrew Bailey’s Assessment

After the meeting, Governor Andrew Bailey said, “Data news since our last meeting suggests that disinflation is now more established. CPI (consumer price index) has fallen from its recent peak, and upside risks have eased. Measures in the budget should reduce inflation further in the near term, but the key question for me now is the extent to which inflation settles at the 2% target in an enduring way. Slack has continued to accumulate in the economy, and unemployment, underemployment and flows from employment to unemployment have all risen.”

Economic Stagnation and Market Forecasts

Data released shows that the UK economy shrank by 0.10% in the last three months to October, and BOE officials said that they expect 0.00% economic growth in Q4 2025, down from previous expectations of 0.30% growth. Financial markets had widely expected a cut in interest rates due to the recent decline in inflation, which had outpaced expectations, lacklustre economic data and a softening labour market. Some experts are at odds as to whether or not there will be one or two rate cuts in the first half of 2026, with the markets currently pricing in a cut of 37 basis points. 

Labor Market Pressures and 2026 Outlook

Some economists suggest that the UK’s surging unemployment will negatively impact pay growth. They argue this will force the BOE into rate cuts in 2026. Much of the debate within the Monetary Policy Committee is expected to focus on how far interest rates should be cut to stabilise unemployment and stimulate a recovery in demand. Currently, it would appear that there is consensus amongst market experts and analysts that there will be an interest rate cut in 2026; however, the scale of easing remains unclear.

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