The 19 year-old has seemingly impressed Pep Guardiola around the first team squad this season, so much so that he's expected to be training with the squad full-time starting in August.
Cole Palmer was central to Manchester City's EDS squad winning their first ever Premier League 2 title and earned himself a senior debut, playing alongside Kevin De Bruyne in Manchester City's Carabao Cup win over Burnley.
He also featured briefly in the Champions League, away in Marseille, but Palmer is still yet to taste what first team football feels like on a regular basis.
According to Simon Bajkowski at the Manchester Evening News, the young midfielder was subject to a lot of interest from Championship clubs. Hoping to take Palmer on loan, Pep Guardiola made it clear he was part of his plans next season.
We've already seen the benefits of not leaving on loan and developing under the Catalan through the rise of Phil Foden, who started for his country on Sunday afternoon in a major tournament for the first time.
It's clear Manchester City feel Cole Palmer has the adequate quality to progress in the same way and tying him down to a new contract will allow for that to happen.
Follow us on Twitter for live updates: @City_Xtra