Markets bet on UK interest rate cuts in 2024 amid recession risk

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Financial markets are betting the Bank of England will be forced to launch a deep round of interest rate cuts in 2024 amid the growing risk of a recession.

Article originally published by The Guardian. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

Published by

14 Dec 2023

Threadneedle Street is widely expected to leave borrowing costs unchanged on Thursday after warning that interest rates would need to remain high for a prolonged period to tackle stubbornly high inflation.

However, City investors warned that the Bank’s strategy was increasingly at risk of being abandoned next year amid a rapidly worsening outlook for the economy. Official figures showed UK gross domestic product shrank in October.

Money markets moved to price in four quarter-point cuts to interest rates starting from the summer, anticipating the base rate would be slashed from 5.25% to as low as 4.25% by the end of 2024.

The first cut is expected as early as May, to 5%, with further reductions pencilled in for the second half of the year.

Rob Morgan, the chief investment analyst at the wealth manager Charles Stanley Direct, said: “The Bank will be conscious of mounting evidence the economy