The Bank of England expects the inflation rate to drop to near 3% by early 2026. Traders are betting on the Bank of England's loose policy.

Bank of England: The inflation rate is expected to fall to around 3% in early 2026 and reach the target of 2% in the second quarter of 2027. Based on market interest rates, the one-year inflation expectation is 2.5%, the two-year inflation expectation is 2.1%, and the three-year inflation expectation is 2.0%. The forecasted GDP growth rate for 2025 is 1.5%, 1.2% for 2026, 1.6% for 2027, and 1.8% for 2028. Traders are betting on the Bank of England maintaining its loose policy and expect a 15-basis-point rate cut in December.