01, August, 2024, LONDON –

Out of a panel of experts, 7 out of 10 believe that the base rate will be brought down in the MPC meeting on 19 September 2024, according to new research conducted by personal finance comparison website, finder.com.

Finder brought together an expert panel of academics, economists, mortgage and savings experts, to ask them for their predictions on what will happen to the base rate for the rest of 2024, and the impact this will have on the UK housing market and wider economy.

The majority of experts were in agreement that the base rate would not be brought down until the September MPC meeting. Alan Shipman, senior lecturer in economics at The Open University explained, “with business investment up year-on-year, inflation still hovering at the 2% target rate and the new government highlighting a large ‘hole’ in the public finances, the MPC majority against a rate cut (7-2 in June) is unlikely to shift much in August. A clearer fiscal trajectory may clear the way for a reduction in September, if inflation drops below 2%”.

1 of the 10 experts, George Sweeney (DipFA), investing expert at finder.com, believes that the Bank of England will hold off until the meeting on 7 November 2024. Explaining his thoughts, Sweeney commented, “With sticky services inflation figures and relatively high wage growth, I think an August base rate cut is pretty much off the table. And, I can’t see the services inflation numbers coming down significantly enough for a September cut to be on the cards”.

He added that, “I think if the data keeps creeping lower, the MPC will hold in September to make sure they don’t jump the gun and then make the first move in November. This may not be the perfect move to make, but I think they’d rather be too slow to bring down rates than act too fast”.

Majority of experts are expecting 2 base rate cuts before the end of 2024

When asked where they believe the base rate will sit by the end of the year, half of experts said they expect the base rate to end the year at 4.75%. This means they expect there will be 2 cuts to the base rate before the end of 2024.

David McMillan, professor in finance at the University of Stirling said, “Several factors play into this, including global uncertainty, such as the recent election in France and the upcoming US election. The Bank of England may also wish to exercise some caution with respect to rate cuts before the first budget of the new Labour government”.

Independent economist, Julian Jessop, echoed the sentiment that the Bank of England is likely to remain cautious on the pace of rate cuts, noting that “inflation has been much higher than expected for some time, and pay pressures remain strong”. However, he also noted that “the economy has been more resilient than feared. But a total of at least two rate cuts seems likely by the end of the year”.

3 out of 10 of the experts expect a more substantial fall to 4.5% by the end of the year. Luciano Rispoli, senior lecturer in economics at the University of Surrey, explained that “if inflationary pressures don’t re-accelerate over the months leading to the next three 2024 meetings beyond August, that the Bank of England will ultimately start “normalising” rates soon. In this set up, I expect a policy rate normalisation in the range of 0.75 – 1% rate cuts”.

The 2 remaining members of the panel believe that any reductions to the base rate will be far more modest, leaving rates sitting at 5% by the end of the year. George Sweeney (DipFA), said that if an initial base rate cut does happen, he believes “there will be a lag before the effects are truly felt and the Bank of England (BoE) will want to see the impact before going ahead with further cuts”.

To see the findings of the panel in full visit: https://www.finder.com/uk/base-rate-survey