OECD Sees BOE Holding Rates in 2026, Cutting to 3.5% in 2027
Updated
Updated · Bloomberg · Jun 3
OECD Sees BOE Holding Rates in 2026, Cutting to 3.5% in 2027
3 articles · Updated · Bloomberg · Jun 3
Summary
A quarter-point BOE cut is now penciled in for 2027, with the OECD expecting rates to stay unchanged through 2026 despite inflation remaining above the 2% target.
The OECD said the latest energy shock should prove transitory, while a weakening UK labor market limits underlying price pressures and reduces the case for near-term tightening.
UK growth was revised up to 0.9% for 2026 from 0.7%, but the 2027 forecast was cut to 1.1% from 1.3%, leaving Britain as the G7's third-fastest-growing economy this year after the US and Canada.
Those projections come as the Iran conflict continues to cloud the outlook by lifting energy and food costs, even as the OECD judges the inflation hit insufficient to derail eventual BOE easing.