BoE Seen Holding Rates Amid Inflation Concerns

The Bank of England will likely keep interest rates on hold at 3.75% for the rest of this year and through mid-2027, according to a Reuters poll of economists.

This decision is due in part to ongoing inflation concerns, which are being fueled by higher energy prices stemming from the U.S.-Israeli war on Iran.

Brent crude oil futures have been approaching $100 a barrel as the conflict continues, but so far, there has been no evidence of these higher energy costs filtering through to inflation in the wider economy.

Nearly 90% of economists polled, 57 out of 65, expect rates to remain on hold for the rest of the year, with eight expecting a rate rise to 4.00% by end-year.

Financial markets are currently pricing three rate hikes through mid-2027, starting in November, but economists say there are no flashing warning signs for the Bank of England to raise rates yet.