Societe Generale economists report that the Bank of England's (BoE) Monetary Policy Committee (MPC) left Bank Rate at 3.75% with an 8–1 vote. Their base case is for rates to remain unchanged through 2026, though further hikes of 50–75 bps are possible if the US‑Iran conflict persists. Recent UK data show stronger borrowing as households and firms lock in rates.

MPC steady but hiking risk persists

"Last week in the UK, the MPC kept Bank Rate unchanged at 3.75% in an 8–1 vote split. Our base case remains for Bank Rate to stay on hold throughout the year, although the call is finely balanced."

"In the absence of a near‑term resolution to the US-Iran conflict, 50 to 75bp of rate hikes this year would appear appropriate."

"On the data front, the money and credit release showed a notable pickup in borrowing, possibly driven by households and firms seeking to lock in interest rates amid the risk of higher rates from the ongoing energy shock."

"In particular, remortgaging and lending to non-financial firms rose to their highest levels since 2020."

"Meanwhile, the BoE’s BEAR conference will provide MPC members with an opportunity to speak following last week’s meeting."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)