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BoE expected to keep Bank Rate at 3.75% amid rising energy risks
Rabobank analyst Stefan Koopman says inflation risks from higher energy prices and geopolitical tensions could revive the case for a later hike, but policy should stay on hold unless an energy shock feeds into wages or prices.
Rabobank’s Stefan Koopman expects the Bank of England to keep Bank Rate at 3.75% at its 30 July meeting and to hold it unchanged through 2026, even as markets still price some risk of further tightening.
He points to softer UK inflation, easing wage growth, and weak activity data as reasons the BoE would resist hikes, while higher energy prices and geopolitical risks are seen as maintaining upside inflation pressure.
Koopman argues that the BoE MPC has room to hold rates because Bank Rate is already restrictive, the labor market is softening, and inflation expectations remain contained, though the risk is skewed toward a later increase if energy stays elevated.
He adds that policy would likely respond only if a lasting energy shock starts to affect wages, prices, or expectations, noting that this transmission has not happened yet, but the committee may be “running out of cover.”