Bank of America Global Research now projects that the Bank of England will implement two interest rate hikes of 25 basis points each. These increases are expected to occur in November 2026 and February 2027, potentially bringing the policy rate to 4.25%.
This forecast aligns BofA with similar projections from J.P. Morgan, Barclays, and UBS. These institutions anticipate that persistent inflation risks, which could push rates above 4% in early 2027, will necessitate a shift in the current monetary policy.
The new outlook marks a significant reversal from the bank's position in June 2026. At that time, BofA expected the central bank to maintain rates at 3.75% throughout 2026, following a period of inflation at 2.8% in May.
Market data from LSEG indicates a 63% probability of a rate hike during the November 2026 meeting. Analysts suggest that geopolitical tensions in the Middle East and potential energy price shocks are contributing to the current economic uncertainty.
