Britons have been warned that the Bank of England interest rate cuts are set to slow as the UK economy faces "upward pressure" after Rachel Reeves' Budget.
Following the Autumn Budget, investors have scaled back predictions for additional interest cuts in 2024, now anticipating fewer than four quarter-point reductions next year.
The Bank of England is expected to cut interest rates this week, lowering the base rate to 4.75 per cent from its current five per cent.
The decision is likely to be supported by a clear majority of the Monetary Policy Committee, with analysts predicting an eight to one vote in favour of the cut.
Investors had previously expected another rate cut in December, but this may not be the case.
If the interest rate drops at the next meeting, it would be the second interest rate cut of 2024, following the previous decrease in August.
The US Federal Reserve is also expected to lower rates by a quarter-point
GETTYMeanwhile, the US Federal Reserve is also expected to lower rates by a quarter-point on Thursday, as inflation nears its two per cent target.
This anticipated move comes as recent data has shown inflation falling to 1.7 per cent, its lowest level since April 2021.
The Office for Budget Responsibility (OBR) warned that the Budget's increased spending could contribute to higher inflation and put pressure on interest rates.
The Chancellor's plan includes nearly £70billion of extra annual spending, funded by tax hikes and additional borrowing.
Suren Thiru, economics director at the ICAEW, said: "Though a November interest rate cut looks nailed on, the upward pressure on inflation from higher business costs resulting from the Budget may mean that the rate cutting cycle over the next year is slower than many expect."
Pantheon Macroeconomics expects the Bank to reduce rates by only 25 basis points per quarter until reaching 3.75 per cent at the end of next year and does not anticipate a change in December.
Policymakers are mindful of potential inflationary pressures, with expectations that inflation may rise in the coming months due to increases in household energy prices and oil price shocks caused by conflict in the Middle East.
The current inflation rate of 1.7 per cent is expected to climb back above two per cent this winter, according to most experts.
