BoE Preview: Gradual cuts, speed limits

We expect the Bank of England MPC to cut its policy rate by 25bp to 4.50% at next week’s meeting, in line with market consensus. Recent data has shown softer inflation and weaker growth, and with the Gilt market scare now fading, the timing is more favourable than expected. The February meeting will also include the Bank’s annual supply stocktake, reassessing the UK economy’s growth “speed limit” of 1.3%. While the MPC is likely to maintain its gradual approach, we anticipate some language tweaks to reflect growing downside risks. We foresee four 25bp cuts in 2025.