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Base rate could fall at least twice in 2024

Base rate could fall at least twice in 2024
John Fitzsimons
Written By:
John Fitzsimons
Posted:
02/01/2024
Updated:
02/01/2024

The Bank of England will cut bank base rate on at least two occasions this year, according to predictions from economists.

The Times newspaper polled dozens of economists to get their forecasts for the year ahead. 

The most common response from economists was that the Monetary Policy Committee (MPC) would cut base rate on two occasions, which was predicted by 42.5% of respondents. 

Notably, some were even more gung ho about the prospects for greater numbers of cuts ‒ 17.5% of economists predicted three cuts, with the same number forecasting four cuts. 10% predicted there would be more than four cuts, with just 5% suggesting base rate will stay at its current level.

Base rate has increased repeatedly over the last year and a half, but the MPC opted to freeze the rate at its last couple of meetings, with inflation steadily dropping. The last inflation data from the Office for National Statistics found that the consumer price index measurement for the 12 months to November had dropped to 3.9% from 4.6 per cent the month before.

Base rate outlook

Some financial firms have published concrete predictions for what they expect to happen with base rate. Capital Economics, for example, has argued that it will be reduced to 3% by late 2025, while Morgan Stanley has predicted it will drop to 4.75% by the end of this year. 

More than 80% of the economists polled by The Times suggested that the economy will grow by no more than 1% over the coming 12 months.

The economists were also downbeat on prospects for the property market. More than a third (35.1%) predicted house prices will drop by between 2% and 5%, ahead of the one in five (21.6%) who forecast a drop of up to 2%.

However, 16.2% predicted house price growth of up to 2%, while 2.7% of economists forecast a jump of between 2% and 5%.