Barclays Predicts Bank of England Rate Hike Amid Middle East Tensions

Barclays has predicted that the Bank of England will raise interest rates by 25 basis points in November, following a 'dramatic shift' in the medium-term energy outlook. This move is seen as a likely response to rising inflation projections, which could surpass 4% at the start of next year.

The bank's analysts note that if the Middle East conflict persists, they see room for another quarter-point hike in February 2027. Barclays shares this outlook with JPMorgan, which also expects rate hikes in November 2026 and February 2027.

However, Goldman Sachs points out that softening economic data or falling energy prices could prompt policymakers to hold off on a rate increase. Morgan Stanley believes rates could remain unchanged for a longer period, though persistent pressures from commodity prices may lead to hikes in November and February.