BoE Interest Rate Hike Predicted for November Amid Escalating Inflation Dangers

Barclays and UBS Global Research anticipate that the Bank of England will lift borrowing costs as early as November, citing escalating inflation dangers. On Thursday, the BoE maintained its key rate at 3.75%, in line with expectations.

The central bank warned that inflation might surpass 4% in early 2027, adopting a more hawkish stance in its meeting minutes. This suggests the BoE could follow European and US peers in increasing borrowing costs.

Following the meeting, these brokerages align with others such as J.P.Morgan in forecasting rate increases in November 2026 and February 2027. UBS economists under Anna Titareva expect the BoE to determine that elevated inflation would outweigh the cost of tightening now and discovering inflation is less stubborn than anticipated.

According to LSEG data, markets are assigning a 63% probability of a BoE hike in November, with another increase anticipated in December. Goldman Sachs foresees a November hike, while Morgan Stanley expects the BoE to remain on an extended hold if energy prices moderate.