# City economists say markets overstate likely Bank of England rate rises

- URL: https://talkfuse.com/story/interest-rates-unlikely-to-reach-4-75-by-next-summer-say-city-economists/
- Published: 2026-10-25T12:00:05+00:00
- Updated: 2026-10-25T12:22:18+00:00
- Original publisher: The Guardian (publisher lean: Left)
- Original article: https://www.theguardian.com/business/2026/oct/25/interest-rates-bank-of-england-rises-summer-2027
- Topics: Business, Economy, Markets, UK, World

## Key points

- Markets expect rates to rise to at least 4.75% by next summer.
- City economists think that path is unlikely.
- The Bank is widely expected to raise rates to 4% in November.

## Summary

City economists say financial markets may be overestimating how far the Bank of England will raise interest rates, as higher energy costs have not yet driven a sharp rise in other prices. Some economists expect the Bank could start cutting rates again by the end of 2027, although further increases remain possible.

Markets imply at least four rises from today’s 3.75% bank rate to 4.75% by next July, and possibly 5% by December 2027. Deutsche Bank estimates only about 0.5 percentage points of rises are priced in after adjusting for risk premia, and expects rates to reach 4.25% by February before holding steady. The Bank is widely expected to raise rates to 4% on 5 November, following September inflation of 3.5%; higher-than-expected increases to the national living wage could add pressure for further rises.

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Summarised by TalkFuse (https://talkfuse.com/). Quote the original publisher for the reporting and link this page for the summary and discussion.