Morgan Stanley Shifts BoE Rate Forecast to Two Hikes

Morgan Stanley has changed its Bank of England interest rate forecast, predicting two 25 basis point hikes in November and February. This is a significant shift from their previous expectation of no hikes for the foreseeable future.

The BoE kept rates on hold last week but warned they might have to go up if the Iran war drags on, while predicting British inflation will top 4% early next year.

Morgan Stanley's analysts believe fiscal policy is a key potential catalyst for more tightening, which could lead to rate hikes. They expect a slowdown in growth at the turn of the year but see balanced near-term risks due to robust global growth.