The bank had previously put its expectation of the base rate for the end of the year at 4.35%, with the Bank of England holding the rate in March and increasing by 0.25% in May.

However, last week the BoE decided to increase the base rate by 0.25% to 4.25%, with Barclays expecting a further hike in May.

It said “resilient growth, a tight labour market and inflation data” would convince the majority of the Monetary Policy Committee (MPC) that another increase is warranted.

Base rates cuts expected in 2024

The bank added that it forecasted two 25 basis point cuts in the second half of next year, which is on top of the two it had already expected.

This means that there would be around 100 basis point cuts in the second half of next year, leaving the base rate at 3.5% next year.

Barclays Research said: “According to our forecasts, by mid-next year, the committee should be attuned to the risks of inflation falling well below target at the relevant policy horizon if the policy stance is left unchanged.

“Hence, we expect policy rates to turn more accommodative, shadowing the fall in inflation,” it explained.

Barclays added that it expected a “minimal recession” with a peak-to-trough fall in real GDP of 0.5% between the third quarter of this year and third quarter of next year. Therefore, annual growth would be negative 0.3% year on year for 2023.

Annual GDP growth for next year is pegged at 0.3%.

It added that core inflation would average 5.1% in 2023, which is up 20 basis points on its previous forecast, but its prediction of 3.1% in 2024 was unchanged.