BoE Rate Hikes Predicted by Morgan Stanley as Growth Concerns Mount

Morgan Stanley has changed its Bank of England interest rate forecast, predicting two quarter-point hikes in November and February. This marks a significant shift from their previous expectation of no hikes for the foreseeable future.

The analysts at Morgan Stanley point to fiscal policy as the key potential catalyst for further tightening. They expect growth to slow down at the turn of the year but believe that global growth will remain robust, presenting balanced near-term risks.

Last week, the BoE kept rates on hold while warning that they might have to increase them if the Iran war drags on. The central bank also predicted that British inflation will top 4% early next year.