Capital Economics: The Bank of England may cut interest rates more than expected, potentially down to 3.5% next year.

Ruth Gregory, deputy chief UK economist at Capital Economics, said that with employment falling, unemployment climbing and wage growth slowing, today's labor market data further confirms our view that the Bank of England will cut interest rates more than the market expects, and interest rates may fall to 3.5% next year.

LSEG data shows that the market has not yet priced in such a large cut in the benchmark rate. According to the data, the vast majority of analysts expect the Bank of England to leave interest rates unchanged at 4.25% at its meeting later this month. Gregory stressed that "the job market is not collapsing. In fact, there has not been a significant increase in the Labour Force Survey (LFS) redundancy rate or HR1 notice of dismissal (a document that must be submitted in the event of a planned redundancy). However, most indicators point to a clear weakening of labour demand. ”

Source: Jin Ten