The Bank of England is now unlikely to cut interest rates in 2026, according to analysts at Deutsche Bank.
Chief UK economist Sanjay Raja said the bank has revised its outlook and now expects Bank Rate to remain at 3.75% for the rest of the year, abandoning earlier expectations of cuts.
He also warned that the risk of a rate hike is increasing, particularly if inflation pressures persist.
Raja said two key factors could push policymakers towards tightening: limited fiscal support to offset inflation and a prolonged Iran conflict, which could extend the current energy-driven price shock.
“If fears of second-round effects increase, the case for a policy shift in the second quarter will strengthen,” he said.
