Morgan Stanley now expects the Bank of England to raise interest rates by 25 basis points in November and again in February. This reverses its previous forecast of no hikes for the foreseeable future.
The firm’s analysts cited fiscal policy as a key potential catalyst for further tightening. In a research note, they said they expect growth to slow around the turn of the year, while robust global growth leaves near-term risks balanced.
The revised forecast follows the Bank of England’s decision to hold rates and its warning that it could raise them if geopolitical tensions, including the Iran war, persist.