London, June 14, 2026, 15:19 BST
- Every one of the 65 economists surveyed in a Reuters poll thinks the Bank of England will leave Bank Rate unchanged at 3.75% on June 18.
- UK inflation expectations shot up, stoking worries higher energy bills could push up wages and prices.
- Prospects for a U.S.-Iran framework deal could take some pressure off oil, though policymakers are still looking at a tough summer.
The Bank of England is seen holding rates steady this week, with markets and economists switching their focus from when cuts might come to whether more tightening could be on the table later this year as worries about Iran and energy-fueled inflation stay front and center. According to a Reuters poll of 65 economists, all expect the Bank Rate to stay at 3.75% on June 18, and the median keeps it there into 2026. But nearly 40% in the survey put at least one hike on the table before year-end.
Watchpoints for the Monetary Policy Committee have shifted from just near-term inflation to whether expectations get stuck. Households and companies now expect higher prices to stick around, according to the Bank of England/Ipsos survey out June 12. One-year inflation expectations went up to 4% from 3.2% in February, with five-year expectations edging to 3.9% from 3.7%. That’s well above the Bank’s 2% inflation target, making these readings politically and economically touchy.
Megan Greene, who sits on the MPC as an external member, said in a June 2 speech that “the case for hiking rates grows as the conflict wears on,” adding that tighter policy “may be necessary” in the weeks or months ahead. Some officials have already called for a stronger response. Greene’s comments showed the Bank’s concern that the energy shock could fuel a bigger wage and price problem, rather than being just a temporary jump in fuel and utility bills. Bank of England
UK growth is slowing, giving some reason to wait. The Office for National Statistics said monthly GDP slipped 0.1% in April after gains of 0.3% in March and 0.4% in February. Services output fell 0.2%. The ONS also pointed to Middle East conflict as a factor, with some businesses blaming it for weaker turnover and bigger energy bills. Reuters said cancellations of Gulf sports events dented UK-linked entertainment.
That sluggish growth is enough for many investors to think the Bank will stay on hold, even after the ECB moved first. The ECB lifted its main rates by 25 basis points on June 11, taking the deposit rate to 2.25% from June 17. It also bumped up its inflation forecasts to 3.0% for 2026 and 2.3% for 2027. ECB President Christine Lagarde cited the Middle East war as “generating inflation pressures.” The move puts Europe’s action in contrast with the BoE’s more cautious line. European Central Bank
The outlook is looking less certain after fresh diplomatic moves from Washington, Tehran and mediators. Reuters said on June 14 the U.S. and Iran are edging toward a framework agreement, but there’s still no timeframe. Previous reports pointed to a possible early deal that could reopen the Strait of Hormuz, which is vital for oil and gas shipments. A drop in energy prices could give the BoE more time. But if supply snags go on, calls for a summer rate hike could come back fast.
UK inflation for May lands June 17, then the MPC vote split follows on June 18. Morningstar, citing FactSet, says consensus is for the Bank of England to hold at 3.75%. Market focus will be on how many policymakers push for a hike, with a narrow split possible if hawks urge action. Danni Hewson at AJ Bell said weak growth, soft jobs data and uncertainty might mean most members decide “the best move is no move at all.” Morningstar
