• The BoE held rates steady in November, but we expect it to cut them in the coming months, as growth is likely to stay sluggish.
• Markets are now looking towards the UK government’s Autumn budget scheduled to be released later in the month.
• The Autumn budget should provide details on the UK governments policy related to taxes, and how it aims to reduce debt and tackle the cost of living problem. 

At its November meeting, the BoE kept its policy rates unchanged at 4%. Policymakers noted that a deceleration in overall inflation is underway, favoured by a restrictive policy stance, softening labour market, and easing services inflation. Risks around achieving the bank’s 2% inflation target are more balanced, and downside risks from weak demand have grown. Looking ahead, we expect one rate cut in December and two more next year, although further actions may depend on incoming data. 

Additionally, we expect economic growth to moderate next year due to domestic pressures and fiscal tightening (efforts to decrease the gap between public expenditure and revenues by either raising taxes, cutting spending, or both). In her upcoming budget, we believe the Chancellor of the Exchequer, Rachel Reeves, could have a difficult task and may need to consider the government’s high borrowing costs, lower productivity, and global economic pressures.

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