Goldman Sachs Sees BOE Rate Hike as Inflation Concerns Mount

Goldman Sachs has revised its forecast for interest rates in the UK, predicting a 25-basis-point rate hike by the Bank of England (BOE) in November 2026. This change comes as inflation concerns persist and growth holds up. The bank had previously expected rates to remain unchanged throughout 2026.

Rising energy prices have contributed to Britain's inflation outlook, with oil prices climbing above US$100 a barrel due to renewed hostilities in the Middle East. In contrast, data showed that Britain's economy expanded at its fastest annual pace in 18 months in July, supported by artificial intelligence and continued momentum from a strong first half.

Goldman Sachs expects the BOE to keep the bank rate unchanged at 3.75 percent at its September 17 meeting. However, after a November hike, the brokerage believes that easing energy prices will reduce the need for further tightening before beginning rate cuts in late 2027.