Market survey expects Bank Rate at 3.75 percent through 2026

Respondents to the July 2026 Bank of England survey overwhelmingly project the policy rate to hold steady at 3.75 percent across remaining 2026 monetary policy committee meetings.

A gradual easing trajectory begins in early 2027, bringing Bank Rate to 3.50 percent by June 2027 and reaching an estimated neutral rate of 3.25 percent by mid-2028.

Inflation expectations reflect a steady disinflation trend, falling from 3.2 percent in the fourth quarter of 2026 to 2.5 percent in one year and reaching the 2.0 percent target at two-, three-, and five-year horizons.

Energy and commodity price developments represent the single most influential driver of near-term rate views.

Economic growth projections remain modest, with median expectations for UK annual GDP growth standing at 1.0 percent for 2026, 1.1 percent for 2027, and 1.4 percent for 2028.

On balance sheet policy, participants project a £50 billion reduction in Asset Purchase Facility gilt holdings during the October 2026 to September 2027 review cycle.

The projected weighting of gilt sales concentrates heavily on short- and medium-maturity bonds, at 43.3 percent and 41.1 percent respectively, while long-maturity bonds account for 15.6 percent.

Ten-year gilt yields stand at a projected median of 4.80 percent by year-end 2026.