HSBC chair Mark Tucker forecasts that the Bank of England will make its first rate cut in June, followed by two more reductions by the end of next year.
That would lower Bank rate to 3.75%, from its current 5.25% level, where it has remained at a 16-year high since August.
“We expect the European Central Bank and Bank of England to cut rates in June, cutting by 150 basis points by year-end 2025,” said Tucker in comments at the lender’s annual meeting, reported by the Guardian.
“We expect the Federal Reserve to cut in September, cutting by 100bps by year-end 2025,” he added.
The HSBC head told shareholders: “Central banks are closely and carefully watching the data and need to be confident that inflation will continue to head down to target on a sustainable basis before lowering rates.
“Our economists continue to anticipate a gradual reduction in inflation with our global inflation forecasts at 5.8% in 2024 and 3.8% in 2025.”
However, Tucker pointed out that there is “relative certainty in the [UK] central bank’s decision-making process”, given inflationary pressures from anaemic economic growth and slowing employment.
“It may not be a steady path,” Tucker added.
However, HSBC’s forecast is ahead of the consensus view in the money markets, which is betting that September will be when the Bank makes its first rate cut.
Members of the Bank’s rate-setting body have raised concerns that wage growth, running at around 6%, may add to persistent inflationary pressure.
UK price growth is currently 3.2%, above the central bank’s 2% target.
Last month, the Bank of England chief economist and MPC member Huw Pill warned that there are “greater risks” from cutting the base rate too early rather than too late.
