Barclays, UBS back BoE hikes as inflation risks mount
TLT•Other broker views remain mixed
However, Goldman Sachs, which also expects a November hike, noted that softer economic data or a decline in energy prices could still keep policymakers on hold.
Morgan Stanley expects the BoE to be on a prolonged hold, provided energy prices ease, while BofA Global Research said any additional rate hike would likely serve as a precaution against inflation risks rather than signal a broader tightening cycle.
UBS sees eventual rate cuts after hikes
"We think the BoE will conclude that higher inflation and the potential hit to its credibility would be more costly than tightening now and finding inflation less persistent than expected," UBS economists led by Anna Titareva said in a note on Thursday.
Following the hikes, UBS also sees the central bank starting to cut rates in the fourth quarter of 2027 and proceeding at a quarterly pace, eventually bringing the bank rate back to 3.25% by the third quarter of 2028.
Barclays and UBS expect BoE hike as soon as November
Barclays and UBS Global Research expect the Bank of England to hike interest rates as soon as November, saying rising inflation risks point to a quicker resumption of policy tightening after the central bank kept rates steady.
The BoE kept interest rates on hold at 3.75% on Thursday as anticipated, but also predicted that inflation could top 4% early next year. Its meeting minutes also struck a more hawkish tone, signalling the BoE could join its European and US counterparts in raising borrowing costs.
The brokerages join peers including J.P.Morgan in expecting rate hikes in November 2026 and February 2027 following the meeting.
