So the Bank of England held rates at 4% at their November meeting. This decision was finely balanced on the back of still too high inflation and uncertainty ahead of the Chancellor's budget later in November. That said, we continue to view a December cut as being extremely likely. The governor did indicate in his position paragraph that he sees the need for a bit more evidence.

This year for disinflationary pressures, in order to be convinced that interest rates need to come down. The fact that inflation has surprised the downside gives us conviction that that is the most likely base case. However, the overall tone of the November decision was relatively hawkish in terms of where the Monetary Policy Committee at the Bank of England sees rates settling at the end of this cutting cycle, with the governor signaling more clearly that he sees this as being closer to, say, 3.5% than our own current view of closer to 3%.

We need to see how the UK macro economy evolves in the coming months as to whether we need to adjust this view. For now, with continued cooling in the labor market, we continue to stick to the view that we see more rate cuts, both this year as well as into 2026, to 3% ahead of next summer as the most likely base case.