Economists see limited BOE easing in 2025 as wage growth and prices stay sticky

A Reuters survey of forecasters this month suggests the Bank of England is likely to trim rates only once more in 2025, most probably by 25 basis points in November, as resilient inflation and firm wage growth constrain scope for easing.

The poll follows the BoE’s quarter-point cut to 4.00 percent earlier in August, delivered on a close vote, and arrives alongside July inflation at 3.8 percent and regular pay growth running at about 5 percent.

Economists said services prices and pay settlements around 3 percent for 2025 new deals will be critical in determining momentum into year-end. While GDP expanded 0.3 percent in the second quarter, most respondents do not see room for a rapid cutting cycle in 2026 given higher estimates of the neutral rate. Rate futures are more cautious, with markets not fully pricing the next move until early 2026.

The backdrop complicates fiscal planning ahead of the Autumn Budget, with the Treasury facing pressure to balance growth-supportive measures against borrowing constraints and inflation dynamics. Investors will look to Jackson Hole commentary and subsequent UK data for clarity on how long policy remains restrictive.