Goldman Sachs: BOE charge outlook post-September assembly

Goldman Sachs anticipates the Bank of England will implement a 25bp cut at the November meeting, following the recent decision to maintain the Bank Rate.

Key Points:

1. BoE Decision Details:

   • The Monetary Policy Committee (MPC) voted 8-1 to keep the Bank Rate unchanged and will maintain gilt stock reductions at £100 billion.

2. Gradual Approach Signaled:

   • The MPC emphasized a “gradual approach” to removing policy restraint, indicating a preference for steady adjustments rather than aggressive cuts.

3. Forecast for Future Cuts:

   • Goldman Sachs predicts a 25bp cut in November, with subsequent cuts leading to a Bank Rate of 3% by September 2025.

4. Incremental Adjustments Expected:

   • The MPC is likely to prefer quarterly adjustments rather than larger 50bp cuts, aligning with their cautious stance.

5. Market Pricing Considerations:

   • The forecast remains conservative compared to market pricing, reflecting a probability-weighted approach to future rate cuts.

Conclusion:

Goldman Sachs maintains a forecast of gradual rate reductions from the BoE, expecting a measured approach to monetary policy that aligns with economic conditions.

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