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Market Participants Survey results - December 2024

Overview

This survey forms part of the Bank’s quantitative market intelligence gathering. It is formulated by Bank of England staff, and enhances policymakers’ understanding of market expectations. The questions involve topics that are widely discussed in the public domain, and never presume any particular policy action. Monetary Policy Committee (MPC) members are not involved in the survey’s design.

Survey respondents originate from a broad set of market participant firms, selected by the Bank based on a number of criteria, including: (i) relevant market activity in UK rates or money markets; (ii) expertise in UK rates markets and/or UK monetary policy; (iii) willingness to participate regularly in the survey and in the Bank’s market intelligence activity; and (iv) membership of one of the Bank’s external market committees.

Please contact MarketParticipantsSurvey@bankofengland.co.uk for queries or for further information.

Survey results

The survey was open from 4–6 December 2024 with responses being received from 87 market participants. For most questions, median responses across participants, along with the 25th and 75th percentiles, are reported.^{footnote [1]} For questions that ask respondents to weight different factors or assign probabilities to specific outcomes, the mean weightings or probabilities are reported. For questions that ask respondents to select one option from a given set of possibilities – the respondent count against each option is reported.

Question 1: Expectations for Bank Rate

1a) What do you see as the most likely level of Bank Rate after the following MPC meetings? ⁽^a⁾

	25th percentile	50th percentile	75th percentile	Number of responses
19 December 2024 MPC	4.75	4.75	4.75	87
6 February 2025 MPC	4.50	4.50	4.50	87
20 March 2025 MPC	4.50	4.50	4.50	87
8 May 2025 MPC	4.25	4.25	4.25	87
19 June 2025 MPC	4.00	4.25	4.25	87
7 August 2025 MPC	3.75	4.00	4.00	87
18 September 2025 MPC	3.75	4.00	4.00	87
6 November 2025 MPC	3.50	3.75	3.75	86
One year ahead (December 2025 MPC)	3.50	3.75	3.75	87
End-2026 Q1	3.25	3.50	3.75	83
End-2026 Q2	3.25	3.50	3.75	82
End-2026 Q3	3.00	3.25	3.75	82
Two years ahead (December 2026)	3.00	3.50	3.75	81
Three years ahead (December 2027)	3.00	3.50	3.75	80
Five years ahead (December 2029)	3.00	3.50	3.75	79

(a) Numbers in the above table are rounded to two decimal places.

1b) And where do you see the level of Bank Rate at which monetary policy is neither expansionary nor contractionary (often referred to as the neutral, natural or equilibrium rate)? ⁽^a⁾

25th percentile	50th percentile	75th percentile	Number of responses
3.00	3.25	3.50	85

(a) Numbers in the above table are rounded to two decimal places.

1ci) Please indicate the percentage probability that you attach to Bank Rate being at the following levels after the 19 December 2024 meeting. Responses should sum to a total of 100%.⁽^a⁾

	Mean probability (%)
4.25%	0.5
4.50%	15.4
4.75%	84.0
5.00%	0.2

(a) In the question provided to respondents, the different Bank Rate outcomes spanned <3.50% and >6.00% at the extremes, and all 25 basis point increments in between. Results were truncated where the mean probabilities above or below a certain outcome were zero. Mean probabilities are rounded to one decimal place. 85 respondents answered this question.

1cii) Please indicate the percentage probability that you attach to Bank Rate being at the following levels after the 6 February 2025 meeting. Responses should sum to a total of 100%. ⁽^a⁾

	Mean probability (%)
<4.25%	1.2
4.25%	13.9
4.50%	68.9
4.75%	15.8
5.00%	0.2

(a) In the question provided to respondents, the different Bank Rate outcomes spanned <3.50% and >6.00% at the extremes, and all 25 basis point increments in between. Results have been aggregated or truncated where the mean probabilities above or below a certain outcome were close to or at zero. Mean probabilities are rounded to one decimal place. 84 respondents answered this question.

1d) Please assign percentage probabilities to Bank Rate reaching its lowest level this cycle, or ‘trough rate’, at the following levels. Responses should sum to a total of 100%. ⁽^a⁾

	Mean probability (%)
At the current level of 4.75%	0.9
4.50%	1.6
4.25%	4.0
4.00%	10.2
3.75%	13.1
3.50%	19.2
3.25%	14.5
3.00%	14.7
2.75%	7.8
2.50%	6.5
<2.50%	7.4

(a) Mean probabilities are rounded to one decimal place. 83 respondents answered this question.

1e) Please weight the following factors (%) in terms of their importance in influencing your expectations for the near-term path for Bank Rate. ⁽^a⁾

	Mean weighting (%)
Your own perceptions of the UK inflation outlook	24.2
Your own perceptions of the outlook for UK activity	21.7
The MPC’s inflation persistence (cases) framework and how related indicators fit into it	20.6
The MPC’s projections and observations on the broader outlook	15.8
Global influences	16.6
Other	1.1

(a) Mean weightings are rounded to one decimal place. 86 respondents answered this question.

Question 2: Macroeconomic outlook

2a) Please provide the annual rate of CPI inflation – conditioned on your Bank Rate expectations (question 1a) – that you see as most likely at each of the following time horizons. ⁽^a⁾

	25th percentile	50th percentile	75th percentile	Number of responses
End-2024 Q4	2.3	2.5	2.6	82
End-2025 Q1	2.3	2.5	2.5	81
End-2025 Q2	2.3	2.5	2.7	81
End-2025 Q3	2.2	2.5	2.9	81
One year ahead	2.1	2.4	2.7	81
Two years ahead	2.0	2.1	2.4	77
Three years ahead	2.0	2.0	2.3	76
Five years ahead	2.0	2.0	2.3	75

(a) Numbers in the above table are rounded to one decimal place.

2b) In the November Monetary Policy Summary, the MPC set out how its decisions have been guided by the need to squeeze remaining inflationary pressures out of the economy and by the consideration of a range of cases that could impact the evolution of inflation persistence. Each case would have different implications for how quickly the restrictiveness of monetary policy could be withdrawn. Within this framework, what weightings would you attach to each of the outlined cases being realised? Responses should sum to a total of 100%. ⁽^a⁾

	Mean weighting (%)
First case: pay and price-setting dynamics continue to normalise following the unwinding of the global shocks (more benign)	36.8
Second case: a period of economic slack may be required in order for pay and price-setting dynamics to normalise fully (intermediate)	38.3
Third case: some inflationary persistence may also reflect structural shifts in wage and price-setting behaviour (least benign)	25.0

(a) Mean weightings are rounded to one decimal place. 83 respondents answered this question.

2ci) In a world where the first case is accepted by all as playing out, what levels of Bank Rate and CPI inflation do you see as ‘most likely’ at the one-year point? ⁽^a⁾

	25th percentile	50th percentile	75th percentile	Number of responses
Bank Rate	3.00	3.25	3.50	74
Annual Rate CPI	2.00	2.00	2.40	72

(a) Numbers in the above table are rounded to two decimal places.

2cii) In a world where the second case is accepted by all as playing out, what levels of Bank Rate and CPI inflation do you see as ‘most likely’ at the one-year point? ⁽^a⁾

	25th percentile	50th percentile	75th percentile	Number of responses
Bank Rate	3.50	3.75	4.00	74
Annual Rate CPI	2.20	2.50	2.70	72

(a) Numbers in the above table are rounded to two decimal places.

2ciii) In a world where the third case is accepted by all as playing out, what levels of Bank Rate and CPI inflation do you see as ‘most likely’ at the one-year point? ⁽^a⁾

	25th percentile	50th percentile	75th percentile	Number of responses
Bank Rate	4.00	4.25	4.25	73
Annual Rate CPI	2.50	2.80	3.10	71

(a) Numbers in the above table are rounded to two decimal places.

2di) Please assign probabilities to the following rates of annual CPI inflation three years ahead. Responses should sum to a total of 100%. ⁽^a⁾

	Mean probability (%)
<=1.00%	3.1
1.01%–1.40%	4.0
1.41%–1.80%	11.1
1.81%–2.20%	35.2
2.21%–2.60%	24.1
2.61%–3.00%	12.4
>3.00%	10.1

(a) Numbers in the above table are rounded to one decimal place. 74 respondents answered this question.

2dii) Please assign probabilities to the following rates of annual CPI inflation on average from five years ahead to ten years ahead (ie analogous to the five-year, five-year forward rate). Responses should sum to a total of 100%. ⁽^a⁾

	Mean probability (%)
<=1.00%	2.2
1.01%–1.40%	4.2
1.41%–1.80%	12.0
1.81%–2.20%	37.1
2.21%–2.60%	25.1
2.61%–3.00%	12.5
>3.00%	7.0

(a) Numbers in the above table are rounded to one decimal place. 73 respondents answered this question.

2e) Please provide the annual rate of UK GDP growth – conditioned on your Bank Rate expectations (question 1a) – that you see as most likely at each of the following time horizons. ⁽^a⁾

	25th percentile	50th percentile	75th percentile	Number of responses
2025	1.20	1.30	1.50	78
2026	1.00	1.25	1.50	75
2027	1.00	1.25	1.50	72

(a) Numbers in the above table are rounded to two decimal places.

Question 3: Expectations for balance sheet and gilt yields

3a) At its September 2024 meeting the MPC voted to reduce the stock of UK government bonds held for monetary policy purposes by £100 billion over the following 12 months to September 2025, to a total of £558 billion. Please provide the annual reduction in the stock of gilts held in the Asset Purchase Facility, comprising both maturing gilts and gilt sales in initial purchase proceeds terms, that you see as most likely over the following annual review cycles (£ billion). ⁽^a⁾

	25th percentile	50th percentile	75th percentile	Number of responses
October 2025–September 2026	75	85	100	68
October 2026–September 2027	48	60	83	67
October 2027–September 2028	28	50	80	65
October 2028–September 2029	37	50	70	65

(a) Numbers in the above table are rounded to the nearest billion.

3b) What do you see as the most likely level for the 10-year gilt yield at the following points in the future (%)?

	25th percentile	50th percentile	75th percentile	Number of responses
End-June 2025	3.90	4.00	4.20	73
End-December 2025	3.75	3.93	4.20	74
End-June 2026	3.50	3.75	4.15	69

Question 4: Expectations for exchange rates

4a) What do you see as the most likely level for GBPUSD one year ahead?

25th percentile	50th percentile	75th percentile	Number of responses
1.2300	1.2500	1.2800	69

4b) What do you see as the most likely level for EURGBP one year ahead?

25th percentile	50th percentile	75th percentile	Number of responses
0.8000	0.8200	0.8400	69

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