Findings from Flagstone’s six-weekly base rate pulse check, surveying senior savings professionals at UK banks on interest rate and inflation expectations before MPC base rate decisions
New data published by Flagstone, the UK’s leading cash savings platform, shows that savings professionals at UK banks are confident that inflation will drop below 2% by the end of 2024, but believe it could rise again in 2025.
In a survey canvassing the opinions of approximately 80 senior savings professionals at UK banks and building societies, the Flagstone Base Rate Poll found that:
– three quarters (74%) of respondents are confident that the Bank of England will achieve its target to bring down inflation to 2% by the end of 2024.
However, many respondents do not believe this low inflation can be sustained:
– almost half (48%) of the banks’ savings specialists predict that inflation risks rising again in 2025.
Echoing their confidence in inflation falling this year, the majority of respondents to Flagstone’s six-weekly poll predict a 75-125 bps fall in the base rate by year-end too.
- 74% of the banks’ savings professionals predict the base rate will end the year between 4% and 4.5%.
- 26% believe the base rate won’t dip below 5% before year-end.
- 96% of banks’ savings professionals expect the Bank of England to hold the base rate at 5.25% at its next Monetary Policy Committee (MPC) meeting next week. The remaining 4% speculate that the rate could increase.
Flagstone’s Co-Founder & CEO, Simon Merchant, comments: “The UK may have dodged a technical recession and heard Budget pronouncements structured to boost confidence in the economy before a general election, but bankers still expect to see more signs of inflation figures slackening before they start to confidently plan for significant base rate reduction.
“Expectations among savings specialists that inflation could still rise again next year points not necessarily to signs of upwards inflationary trends, but a general lack of confidence in the market and concerns about further headwinds the next few months could have in store.”
Flagstone’s six-weekly base rate predictions poll is conducted in the days leading up to MPC base rate decisions to capture live sentiment and expectations among those setting the agenda for the cash deposits and cash management markets.
