"The UK inflation outlook was starting to brighten, but the conflict in the Middle East has thrown a spanner in the works. Against this backdrop, it's almost certain that the MPC will keep bank rate unchanged at 3.75% at the March meeting. If the shock proves short-lived and recent price rises fully reverse, we still think there's a reasonable chance that the MPC will resume its cutting cycle either in April or June."
"Reflecting the scale of volatility we're all coming to terms with, it was only two weeks ago that a March rate cut looked like a dead cert. A cut clearly makes no sense now. Given uncertainty about the outlook for energy prices, inflation and the economy, the most sensible thing for the Bank of England to do now is wait for more clarity."
Energy price surges triggered by conflict in Iran and Strait of Hormuz closure have reversed expectations for a Bank of England interest rate cut. Analysts now anticipate rates will remain at 3.75% rather than decrease as previously expected. The escalating wholesale energy prices reignite inflation concerns, threatening to push consumer prices higher. Rate cuts may be postponed until the second quarter or abandoned entirely. Britons already facing financial strain from fuel and household costs could experience further hardship as the Bank prioritizes price stability over rate reductions amid the Middle East energy crisis.
Read at London Business News | Londonlovesbusiness.com
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