BoE's Rate Cut Path Shifts in New Forecast
A major shift in expectations has emerged for UK monetary policy. On March 9, 2026, UBS Global Research revised its outlook, pushing back the anticipated first rate cut by the Bank of England from March to April, signaling growing caution over inflation resilience and economic momentum.
Gradual Easing Expected Through 2026
The revised forecast calls for two 25bps reductions—in April and July—bringing total easing to 50bps for the year. This adjustment reflects concerns over slower-than-expected inflation decline, alongside mixed signals from the labor market and consumer spending.
Inflation and Growth Drive Caution
While headline inflation continues to trend downward, core measures remain sticky, particularly due to elevated service costs and wage pressures. Economic indicators have also shown inconsistency, with PMI data failing to confirm a sustained rebound, prompting a more cautious approach from policymakers.
- First rate cut delayed from March to April
- Two 25bps cuts expected in April and July
- Inflation trajectory remains a key constraint
- Central bank opts for measured, risk-averse stance
Overall, the shift underscores the delicate balancing act facing UK monetary authorities amid global uncertainty and domestic economic fragility.