Citigroup and Goldman Sachs Predict BoE Rate Hikes Amid Rising Inflation Pressures

Citigroup and Goldman Sachs have joined forces in forecasting Bank of England rate hikes later this year, citing persistent inflation pressures. Both brokerages expect policymakers to continue tightening monetary policy due to rising energy prices, strong growth data, and a larger-than-expected rise in headline inflation.

Goldman Sachs analysts anticipate a quarter-percentage-point hike in November 2026, while Citigroup expects 'one hike later this year and another in early 2027, likely in November and February.' This change of heart comes after both brokerages previously expected rates to remain unchanged throughout 2026.

Rising energy prices have added to concerns about Britain's inflation outlook, with oil climbing above $100 a barrel due to renewed hostilities in the Middle East. Meanwhile, Goldman expects the BoE to keep the bank rate unchanged at 3.75% at its September 17 meeting.

Citigroup believes it will receive a more hawkish message from the Bank of England this month. Both brokerages expect the central bank to eventually shift to rate cuts, with each forecasting the easing cycle to begin by the end of 2027.