Market participants see Bank Rate stable near-term, lower long-term

The Bank of England's latest Market Participants Survey reveals a strong consensus for the Bank Rate to remain at 3.75 percent following the June, July, September, November, and December 2026 MPC meetings.

Median expectations show the rate holding steady at 3.75 percent through February 2027, before a gradual decline to 3.50 percent by March 2027 and 3.25 percent by end-2027 Q4. Participants also estimate the neutral rate, where monetary policy is neither expansionary nor contractionary, at a median of 3.25 percent, with a range of 3.00 to 3.50 percent across respondents.

For the upcoming 18 June 2026 MPC meeting, 88.1 percent of respondents attach a probability to Bank Rate remaining at 3.75 percent, with only 0.5 percent expecting a cut to 3.50 percent.

Similarly, for the 30 July 2026 meeting, 63.8 percent foresee 3.75 percent, while 32.7 percent anticipate a rise to 4.00 percent, indicating some divergence further out.

Looking at the macroeconomic outlook, market participants expect annual CPI inflation to reach 3.0 percent by end-2026 Q2, gradually falling to 2.2 percent two years ahead and 2.0 percent three years ahead, aligning with the Bank's target.

UK GDP growth is projected at a median of 0.90 percent for 2026 and 1.00 percent for 2027.

Key factors informing near-term Bank Rate expectations include energy and commodity price developments (weighted 30.3 percent), realised inflation outcomes (17.6 percent), and domestic activity and labour market conditions (17.5 percent).

Uncertainty around global oil and gas prices (39.3 percent) and second-round effects in wage-setting (28.1 percent) are the primary drivers of overall uncertainty for the future path of Bank Rate.