With cuts on the horizon, Goldman Sachs has thrown down the gauntlet with a striking prediction that paints an alluring picture of the future economy. However, it would be wise to approach this forecast with measured scepticism, given the Bank of England's own projections suggesting a more gradual easing to 4.2% in 2025. These markedly different views highlight the current unreliability of forecasts, with the inflation outlook being a key driver of base rate levels. While inflation has cooled significantly to its lowest level in three years, a mild resurgence is expected in early 2025, potentially moderating the pace of cuts.

However, with interest rates on the whole still trending lower into 2025, certain sectors stand to benefit, with property, utilities, growth-orientated companies and small-caps historically outperforming in low-rate environments. However, this silver lining comes with a cloud for savers, who may find themselves squeezed in a lower-yield environment, so diversification will be essential.