Interest rate woes

CBI: Interest rates won’t be cut until 2026

The Confederation of British Industry (CBI) does not expect the Bank of England to cut interest rates until 2026, predicting that the base rate will stay at 5.25% for at least two more years. The CBI’s forecast is based on projections showing that consumer price inflation will not reach the Bank’s 2% target until Q3 2025. The business lobby group has warned that prolonged high interest rates will hit consumer spending and business investment, with this contributing to sluggish economic growth. The CBI expects the economy to grow 0.8% next year after expanding 0.6% in 2023. Louise Hellem, chief economist at the CBI, said: “Businesses are gearing up for another tough year ahead, with our forecast expecting weak growth to persist over 2024. Given that this is coming after an already challenging few years, it’s clear that the 2020s have yet to roar.”