FINANCIAL experts are divided on whether this morning’s weak GDP data will boost the chances of a rate cut at the March Bank of England interest rate meeting.
Some say it could potentially trigger a 0.5% rate cut if upcoming UK economic data underperforms, while others said “if price growth remains sticky, they [MPC members] will argue that cutting too soon risks undoing hard won progress”.
In the three months to December 2025, compared with the three months to September 2025, real gross domestic product (GDP) grew by 0.1%, after a fall of 0.1% in the three months to November, revised down from growth of 0.1%. Monthly GDP is also estimated to have grown by just 0.1% in December.
Some believe such underwhelming data could tip the balance at the next meeting of the Monetary Policy Committee (MPC) in March.
“Popping off”
Ben Perks, Managing Director at Stourbridge-based Orchard Financial Advisers, said “the MPC WhatsApp group must have been popping off this morning. The growth data was pathetic and plays right into the hands of the dovish voters on the MPC”.
Omer Mehmet, Managing Director at Welling-based Trinity Finance, agreed: “Economic growth coming in weaker than expected could see a hawk or two turn slightly more dovish at the March Bank of England interest rate decision, all the more so if inflation starts to edge down as Threadneedle Street predicts.
“It will be interesting to see how Swaps, which determine the pricing of fixed rate mortgages, react to this data. Borrowers could be the winners of such anaemic economic growth.”
Pressure on MPC
Craig Fish, Director at London-based Lodestone Mortgages, said “this dire GDP data piles more pressure on the MPC ahead of the March 19th meeting”.
He continued: “The February vote was already a knife-edge 5-4 to hold at 3.75%, and that was before today’s figures landed. With growth flatlining and construction in free-fall, the hawks are running out of arguments.
“A March cut to 3.5% now looks more likely than not. Markets are already pricing in further easing across 2026 and today’s data only accelerates that thinking.
“As for the pound, sterling was already under pressure this morning ahead of the data, weighed down by BoE dovishness and domestic political uncertainty. Weak GDP won’t help. Expect the currency to drift lower as rate cut expectations firm up.
“For mortgage holders, this is significant. Swap rates will be watching closely, and any downward movement could feed through to fixed rate pricing sooner than many expect.”
Economy “on its knees”
Emma Jones, Managing Director at Runcorn-based Whenthebanksaysno.co.uk, said the economy urgently needs an injection of life: “The Bank of England has already hinted at rate cuts if inflation gets back to, or around, target and this shambolic data could see the chances of a rate cut at the next meeting increase.
“The economy is on its knees and needs stimulus urgently. Borrowers could potentially benefit next month as the Bank of England seeks to get the economy firing again, at least as long as inflation starts to fall.”
But some experts said the Bank of England will remain laser-focused on inflation. Philly Ponniah, Chartered Wealth Manager at Philly Financial, said: “For the more hawkish MPC members, weak growth alone is rarely enough. Their focus is still inflation and wage pressures.
“If price growth remains sticky, they will argue that cutting too soon risks undoing hard won progress. But this kind of anaemic data does shift the tone. It strengthens the case for those already leaning toward a 0.25% cut and makes it harder to justify holding rates purely on growth optimism.
“So yes, it could tip one or two MPC members toward a reduction, especially if upcoming inflation or labour market data also softens.”
Rate cut incoming?
Samuel Mather-Holgate, Managing Director at Swindon-based Mather and Murray Financial, believes the decision is as good as made and could even see a 0.5% reduction: “Nearly no growth in the UK economy and core inflation on track to fall off a cliff means the central bank now has to cut rates at the next meeting.
“There is plenty more economic data coming in before the next policy meeting and if it is underwhelming then the Bank of England could deliver a 0.5% given the spiral of stagnation we are in.”
But some worry a cut will come too late for the economy. Michelle Lawson, Director at Fareham-based Lawson Financial, said: “Something needs to happen and fast to reignite the economy but I fear the damage is done and a plaster in the form of a rate cut simply won’t be enough this time.”
Photo by Markus Winkler on Unsplash
