Citigroup and Goldman Sachs now expect Bank of England (BoE) interest rate hikes due to persistent inflation. Both banks previously anticipated rates would hold steady through 2026.
The revised outlook stems from several factors. Wholesale energy prices increased significantly. Oil surpassed $100 a barrel. The UK economy showed stronger-than-expected growth. Headline inflation readings were higher.
Goldman Sachs projects a 25-basis-point rate increase in November 2026. Citigroup foresees a hike this year, likely in November, with another to follow in early 2027.
Both banks expect the BoE to hold rates at its September 17 meeting. However, a more hawkish tone is expected. Market data indicates traders are pricing in 47 basis points of BoE rate hikes by year-end.