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BOE: VIEW CHANGE: UBS looks for sequential cuts to start later in 2025

BOE
  • UBS continues to look for the next BOE cut in November before a pause in December. However, it has now tweaked its 2025 call and now looks for 150bp of cuts to 3.25% by end-2025 (from 3.00% previously). UBS now expects the quarterly pace of cuts to be maintained until August 2025 before sequential cuts begin (previously it looked for sequential cuts from February 2025, reaching 3.00% by November 2025).
  • UBS notes that it now expects headline inflaton only to return to 2% in October 2025 rather than in early 2025 following recent energy price changes.
  • At the September 2024 meeting UBS looks for a 7-2 vote for Bank Rate on hold (Dhingra and Ramsden dissenting for a cut), noting that it sees "a strong possibility for a more gradual reduction of the BoE’s balance sheet by ceasing active gilt sales in the year."
  • Note that the UBS early 2025 call change (from sequential to quarterly cuts) was almost the exact opposite of the Goldman Sachs call change late yesterday (that we covered earlier). GS now looks for sequential cuts from November 2024 to 3.00% in Q3-2025 (versus its prior call of quarterly cuts to 3.00% by Q3-2026).

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