Bank of America Predicts BoE Rate Hold, Delays Cuts, Survey Flags 4.3% Cash
Bank of America forecasts Bank of England will hold rates, delaying cuts to June and September, revises 2026 UK GDP to 1.2% with inflation at 2.2%, citing a 40-60bps energy shock. Its fund-manager survey found cash allocations at 4.3%, with overweights of 34% in commodities and 53% in emerging equities.
1. UK Economic Forecast Revision
Bank of America lowered its 2026 UK GDP forecast to 1.2% and revised inflation to 2.2%, reflecting slower growth expectations as energy costs weigh on activity.
2. BoE Rate Path Adjustment
The bank predicts the Bank of England will hold its Bank Rate in March and postpone cuts until June and September, a shift from earlier calls for cuts in March and June.
3. Energy-Price Shock Impact
At current energy futures levels, BofA estimates inflation could be 40 basis points higher in 2026, reaching a 60 basis-point peak in the second half, raising risks of delayed disinflation.
4. Fund-Manager Survey Results
In its March fund-manager survey, cash allocations climbed to 4.3%, while participants reported net overweights of 34% in commodities and 53% in emerging-market equities, indicating cautious positioning.