Goldman Sachs Sees Bank of England Lifting Rates in November

Goldman Sachs has revised its outlook for the Bank of England's interest rate policy. The bank now expects the central bank to raise rates by a quarter-point in November, citing persistent inflation and resilient economic growth. This change in view comes as energy markets tighten and price pressures prove stickier than expected.

The analysts at Goldman Sachs point out that wholesale energy costs have surged in recent weeks, while headline inflation has risen more than the Bank of England projected. Additionally, indicators of economic activity have come in stronger than anticipated. These factors combine to leave the Monetary Policy Committee with little reason to hold back on raising rates.

The analysts also note that growth momentum is adding pressure for tighter policy, as the UK economy expanded at its fastest annual pace in 18 months during July. This resilience reduces the urgency for the Bank of England to provide stimulus and gives officials room to prioritize containing price growth.