The terminal rate that the firm sees the BOE cutting to is still 3%, in which they view as “neutral”. But “with the near-term cost headwinds”, they are revising their forecast timeline in seeing the central bank now cutting once every quarter starting from September. That will mean reaching the 3% estimate in Q3 2026. HSBC adds that “there are risks in both directions” now.

HSBC still sees the BOE cutting the bank rate in May and August but previously anticipated a rate cut “at every meeting from September 2025 to February 2026” to a 3% terminal rate.