LONDON, Feb. 12 (Xinhua) -- A leading think tank predicted on Wednesday that the Bank of England (BoE) will implement two additional interest rate cuts this year and again in 2026, reducing rates down to around 4 percent, signaling a cautious approach amid an economy looking for lower borrowing costs.

The National Institute of Economic and Social Research (NIESR) also projected that inflation will rise to 3.2 percent in January before gradually declining to an average of 2.4 percent in 2025. Afterward, inflation is expected to stabilize at the BoE's 2 percent target on a sustained basis.

NIESR further forecasted that the British economy will grow by 1.5 percent this year, a more optimistic outlook than the BoE's projection last week.

However, NIESR economist Benjamin Caswell noted that the think tank placed less emphasis on factors such as global trade uncertainty, poor business sentiment, and weak economic growth at the end of 2024.

The forecast also cautioned that GDP growth would not immediately translate into improved living standards for all households. It warned that the living standards of the bottom 40 percent of households are unlikely to return to pre-2022 levels before the end of 2027. Although real personal disposable income is expected to grow by 1.9 percent in 2025 and 1 percent in 2026, this will not fully offset the decline in living standards experienced between 2022 and 2024. Enditem

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