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Bailey to become a December dove says HSBC

ended 08. December 2025

In a research note published overnight, HSBC says it, too, now expects the Bank of England (BoE) to cut the base rate in December, by 25 basis points. It had previously expected a hold. This, it says, is in line with market expectations, which are pricing a 93% chance of a cut. The lender says it expects a 5-4 vote to cut, with Governor Andrew Bailey switching his vote from November and the Pound a key driver as a surprise rate hold would only add to sterling market confusion. HSBC says that ‘in our view the last thing the sterling rate market needs right now is the BoE adding to a sense of confusion. Governor Bailey will be aware of this. Given he’s not made any public comment that pushes back against market pricing, we fall in line with the market and assume a December cut. Beyond that, we see another three 25bp Bank Rate cuts in 2026 (at the February, April and July MPR meetings). And we keep our sub-market terminal rate forecast of 3.00%. We think that policy will be returned to a neutral stance, and that a 3.50-3.75% range is too high for the UK neutral rate given its sluggish productivity growth.’

Keen for views from forex experts, economists, mortgage brokers, financial advisers and those in the property industry., e.g. what would this mean for mortgage pricing in 2026, the Pound and the investment landscape?

6 responses from the Newspage community

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Riz Malik
Independent Financial Adviser at R3 Wealth
Expectations are for a 25 basis point cut at the next Bank of England meeting but let’s look at the fundamentals. Inflation is still miles from its 2% target and employment rates haven’t fallen off a cliff to suggest deep cuts are ahead. Forecasting base rates is not an exact science but at this moment a cheaper cost of borrowing is one mechanism to stimulate some sort of economic growth in this market given the government's inability to do so. Given 2026 has approximately 1.9 million fixed rate deals ending , with many of those borrowers coming off very low rates, a 2026 packed with rate cuts will come as welcome news to borrowers.
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Tony Redondo
Founder at Cosmos Currency Exchange
The Pound faces a challenging 2026 outlook as inflation trends toward 2%, growth slows to 0.9% and the labour market weakens, all of which points to further Bank of England rate cuts and currency pressure. The 18 December 0.25% cut to 3.75% is just over 90% priced in. At November's meeting, before the Budget, Governor Bailey swung a tight 5-4 vote to hold at 4%, with four members backing a cut, setting up December for action. The real debate centres on 2026's pace: the OECD predicts two more cuts to 3.5% by June before pausing, while HSBC forecasts a more aggressive path to 3% by year-end. Either trajectory suggests continued Pound weakness, particularly against the Euro. HSBC's note about avoiding "sterling market confusion" is astute. With UK fiscal policy tightening while the eurozone loosens, this divergence creates additional pressure on the Pound and potentially forces more aggressive BoE easing than anticipated.
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Ben Perks
Managing Director at Orchard Financial Advisers
An interest rate cut appears to be nailed on. It will give the property market a real shot in the arm and launch borrowers into 2026 in full-on beast mode. Whilst the economy looks lacklustre, Bailey and his chums on the Monetary Policy Committee could lead the way and ignite some growth in the property sector.
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Shaun Sturgess
Director at Sturgess Mortgage Solutions
2026 is shaping up to be a far more active year than 2025, with lower mortgage rates powering the property market and boosting sentiment among borrowers.
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Omer Mehmet
Managing Director at Trinity Finance
Markets are bracing for the Bank of England to cut next week, with Governor Andrew Bailey shifting to a dove. But before the rate decision we are due the latest inflation data, which, if it doesn't play call, still has the potential to throw a spanner in the works.
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Rohit Parmar-Mistry
Founder at Pattrn Data
HSBC is right to flag "sluggish productivity" as the drag on our economy, but I see a massive opportunity here. A rate cut in December and through 2026 gives UK businesses vital breathing room. The exciting part isn't just cheaper borrowing, it’s what we can build with it.

For the first time in years, leaders will have the liquidity to properly invest in their workforce. If we channel this capital away from boardroom vanity projects and into practical, boring AI that actually helps staff, we can reverse the trend. I’m seeing more companies finally wake up to this reality, moving away from hype and towards tools that fix real operational headaches.

If we get this right, 2026 won’t just be about lower rates, it will be the year we finally crack the productivity puzzle. We have the talent; now we can afford the right tools to let them fly.