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2026-11-05 10:28:26
[Bank of England expected to raise interest rates to 4% on Thursday, joining major central banks in tightening for the first time in three years] (1) Affected by the US-Iran conflict pushing up inflationary pressures, the market expects the Bank of England to raise its benchmark interest rate from 3.75% to 4% on Thursday, the first rate hike since August 2023; the vote is expected to be 7 to 2. (2) The UK inflation rate rose to 3.5% in September, higher than the central bank's 2% target and previous forecasts; the Bank of England is the last major developed country central bank that has not yet raised interest rates. (3) The US-Iran conflict has kept oil prices around $100 per barrel and natural gas prices three times the pre-conflict level. The longer the conflict lasts, the greater the impact of energy prices on the economy may be. (4) The UK economy is more resilient than expected, possibly due to spending in the AI sector; however, there are still few signs of a significant "secondary" impact of inflation on wage agreements. (5) Central bank policymakers are divided on the threat of inflation: some officials want to see signs of a second round of effects first, while others are worried that raising interest rates is too late. (6) The market expects the Bank of England to raise interest rates at least three more times next year after raising rates this month; however, most economists expect a more moderate tightening, with PIMCO predicting only one more rate hike in February next year.
