2024 Base Rate Predictions

This is a difficult one to predict - however I believe the potential for base rate cuts may happen in May or June of 2024, however, the continued weakening of the pound may accelerate this reduction sooner. By the end of 2024, I can see the Bank Of England Base rate between 3.25% and 4.0% however there's a lot of water to cross before the end of 2024, and a lot can change between now and then.

With the recent holds I think we will see more of this and, as all past decisions seem to be, will be data driven. With the GDP not being in a great state the Bank will have to do something before things become even more dangerous. i think we will see a rate drop possibly May/June at the latest. None of the forecasters/economists seem to be able to correlate on this so it really is anyone's guess. What we have to do is hope the Bank does something soon to undo the mess they have made.

I think the first cut will be May and will be 0.25% to see how markets react. A recession is looming and the Bank of England will want to try and stop this. Assuming all goes well, that there are no nasty surprises and that inflation is still under control there will then be further cuts on both both August and November. We are likely to see 2024 out at a rate of 4.25 or 4.5%.

I would expect the first base rate reduction in March or May. However, it will only be slow incremental reductions, with further reductions in August and November most likely. I would currently expect 3 rate reductions over 2024 unless inflation or the economy does something surprising.

I reckon the first reduction in base rate will be in June, which gives the economy enough time to settle and slow down sufficiently for some intervention by the Bank of England. That will then continue until the end of 2024, with a target rate of 4% not out of line with many predictions - a reduction of 1.25% overall. Naturally, this assumes lots of other issues don't get in the way, such as above-inflation pay rises, fuel costs are contained, and our overall inflation continues a slow decline towards that target of 2%. We have plenty of financial pain to come in the coming months, but to drive down rates we need a little sufference first, unfortunately.

It’s been a whirlwind year for existing and potential homeowners after mortgage rates soared in the wake of the mini-budget at the end of September 2022. We believe that 2024 will be a blockbuster year for bankers and investors who have stood for far too long and have not been able to make their profits in the lull of the current market.

2024 will begin with a rate cut in January, and we expect to see between 3 and 4 rate cuts through the year. Our prediction remains that we will end 2024 with a base rate in the region of 4%. To be hyper-optimistic, the rates might even touch the late 3s (i.e. 3.75% or thereabouts) if we have a shorter summer and a prolonged winter next year (yes, the weather and inflation are interlinked!), it is likely the interest rates will likely end in the late 3s. Corrolarily, if we have a longer summer resulting in higher spending, inflation will still be a bug bearer next year and interest rates will be in the high 4s.

Considering the Bank of England’s track record, they are bound to get the strategy wrong. Andrew Bailey will keep rates too high for too long, making the impending recession deeper than necessary. At that point rates will have to be slashed and they will be cut by up to 2% in the second half of the year.