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Market Participants Survey results - February 2025

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 22–24 January 2025 with responses being received from 86 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
6 February 2025 MPC	4.50	4.50	4.50	86
20 March 2025 MPC	4.50	4.50	4.50	85
8 May 2025 MPC	4.25	4.25	4.25	86
19 June 2025 MPC	4.25	4.25	4.25	85
7 August 2025 MPC	4.00	4.00	4.25	86
18 September 2025 MPC	4.00	4.00	4.25	85
6 November 2025 MPC	3.75	3.75	4.00	86
18 December 2025 MPC	3.75	3.75	4.00	85
One year ahead (February 2026 MPC)	3.50	3.50	3.75	86
End-2026 Q1	3.25	3.50	3.75	85
End-2026 Q2	3.25	3.50	3.75	84
End-2026 Q3	3.00	3.50	3.75	83
Two years ahead (February 2027)	3.00	3.50	3.75	84
Three years ahead (February 2028)	3.00	3.50	3.75	83
Five years ahead (February 2030)	3.00	3.50	3.75	82

(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 6 February 2025 meeting. Responses should sum to a total of 100%. ⁽^a⁾

	Mean probability (%)
4.25%	2.5
4.50%	84.0
4.75%	13.3
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. 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 20 March 2025 meeting. Responses should sum to a total of 100%. ⁽^a⁾

	Mean probability (%)
<4.25%	1.5
4.25%	20.9
4.50%	69.1
4.75%	8.2
5.00%	0.3

(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 where the mean probabilities above or below a certain outcome were close to or at zero. Mean probabilities are rounded to one decimal place. 85 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%	1.1
4.50%	2.6
4.25%	4.1
4.00%	10.3
3.75%	12.3
3.50%	18.5
3.25%	15.0
3.00%	16.8
2.75%	7.3
2.50%	5.4
<2.50%	6.8

(a) Mean probabilities are rounded to one decimal place. 85 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	23.3
Your own perceptions of the outlook for UK activity	21.4
The MPC’s inflation persistence (cases) framework and how related indicators fit into it	21.0
The MPC’s projections and observations on the broader outlook	17.0
Global influences	15.4
Other	1.9

(a) Mean weightings are rounded to one decimal place. 85 respondents answered this question.

1fi) Over the last few months UK short rates have increased. For example, since the start of 2024 Q4, the one-year, one-year forward swap rate had increased 64 basis points as of 5pm on 21 January 2025. Please weight the following factors (%) in terms of their importance in affecting this move in short rates. ⁽^a⁾

	Mean weighting (%)
UK specific developments	35.5
Global developments	53.3
Market technical factors	10.6
Other	0.5

(a) Mean weightings are rounded to one decimal place. 85 respondents answered this question.

1fii) Within UK specific developments please weight the following subfactors in terms of their importance of driving these moves. Responses should sum to a total of 100%. ⁽^a⁾

	Mean weighting (%)
UK specific demand outlook	27.9
UK specific supply outlook	36.1
Changing perceptions about the MPC’s reaction function	10.1
Other UK developments	26.0

(a) Mean weightings are rounded to one decimal place. 85 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-2025 Q1	2.5	2.5	2.8	80
End-2025 Q2	2.5	2.8	3.1	80
End-2025 Q3	2.4	2.9	3.3	80
End-2025 Q4	2.3	2.7	3.0	81
One year ahead	2.1	2.5	2.8	80
Two years ahead	2.0	2.2	2.4	80
Three years ahead	2.0	2.0	2.4	77
Five years ahead	2.0	2.0	2.5	76

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

2b) The Committee has stated that it’s deliberations had been supported by the consideration of a range of cases that could impact the evolution of inflation persistence. 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)	36.7
Second case: a period of economic slack may be required in order for pay and price-setting dynamics to normalise fully (intermediate)	38.2
Third case: some inflationary persistence may also reflect structural shifts in wage and price-setting behaviour (least benign)	25.1

(a) Mean weightings are rounded to one decimal place. 82 respondents answered this question.

2ci) 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%	4.2
1.01%–1.40%	4.4
1.41%–1.80%	10.5
1.81%–2.20%	34.0
2.21%–2.60%	22.8
2.61%–3.00%	14.9
>3.00%	9.1

(a) Numbers in the above table are rounded to one decimal place. 77 respondents answered this question.

2cii) Please assign probabilities to the following rates of annual CPI inflation on average from five years ahead to 10 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%	3.0
1.01%–1.40%	4.0
1.41%–1.80%	10.6
1.81%–2.20%	34.2
2.21%–2.60%	24.2
2.61%–3.00%	13.5
>3.00%	10.4

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

2d) 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	1.00	1.20	1.40	80
2026	1.00	1.25	1.50	80
2027	1.20	1.25	1.50	75

(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 (£ billions). ⁽^a⁾

	25th percentile	50th percentile	75th percentile	Number of responses
October 2025–September 2026	70	80	100	72
October 2026–September 2027	31	50	80	72
October 2027–September 2028	28	50	71	72
October 2028–September 2029	37	40	60	71

(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	4.25	4.40	4.60	76
End-December 2025	4.00	4.25	4.50	76
End-June 2026	3.80	4.00	4.30	75

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
1.2000	1.2300	1.2600	72

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

25th percentile	50th percentile	75th percentile	Number of responses
0.8200	0.8400	0.8570	72

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