Goldman Sachs has shifted its view for the Bank of England’s monetary policy, now expecting a rate cut of 25 basis points in November.

I had the headlines on this yesterday:

Adding a little more now on GS’ reasoning.

The investment bank points to notably weaker-than-expected UK data, including slowing wage growth, a cooling labour market and GDP growth tracking below the central bank’s estimates.

Meanwhile, the upcoming UK budget (scheduled for 26 November) is forecast by Goldman Sachs to deliver a large contractionary fiscal impulse, which would further tip the balance in favour of loosening monetary policy. The bank flags that the fiscal tightening — including tax increases and spending restraint — will weigh on demand and provide the BoE with scope to ease.

Combined, the softer data and fiscal head-winds underpin Goldman Sachs’ expectation that the BoE will embark on a more aggressive path of rate cuts than previously anticipated, bringing its terminal rate down toward 3 per cent by mid-2026.