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BOE: VIEW CHANGE: UBS looks for sequential cuts to start later in 2025
- 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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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.