GBP: Bank of England uncertainty with disinflation trend – UBS

UBS economist Paul Donovan highlights uncertainty around the Bank of England meeting, contrasting it with a more predictable ECB. He explains that quirks in data collection distorted December inflation, but underlying UK inflation is expected to trend lower. This should permit interest rate cuts later in 2026, although UBS does not expect the Bank of England to ease policy immediately.

BoE path to eventual rate cuts

"The Bank of England offers some uncertainty."

"Weirdness in data collection timing distorted December inflation numbers, but the trend in inflation should be down."

"That will allow rate cuts this year, but not just yet."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)