UK Interest Rates Unlikely to Hit 4.75% by Next Summer, City Economists Warn

City economists are pushing back against market predictions that the Bank of England will raise UK interest rates to 4.75% or higher by next summer, arguing that such a rapid tightening path is unlikely. Current market-implied expectations suggest the Bank could hike the base rate from 3.75% today to 4.75% by the end of July, with a possibility of reaching 5% by December 2027. However, experts contend that the Bank is more likely to adopt a cautious approach, and some even suggest rates could be lowered by the end of 2027. This divergence matters because interest rate expectations influence borrowing costs for mortgages, business loans, and government debt, affecting everything from household budgets to economic growth. If economists are right, borrowers may face less pressure than feared, while savers might see lower returns than markets currently price in. The debate highlights uncertainty over the UK's inflation trajectory and the Bank's policy stance. Ultimately, the path of rates will depend on incoming data, but for now, the message is clear: don't bet on a rapid climb to 4.75%.