{"id":441596,"date":"2026-11-05T09:40:05","date_gmt":"2026-11-05T02:40:05","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/bank-of-england-preview-first-hike-to-4-expected-as-energy-pushes-inflation-to-3-5-441596\/"},"modified":"2026-11-05T09:40:05","modified_gmt":"2026-11-05T02:40:05","slug":"bank-of-england-preview-first-hike-to-4-expected-as-energy-pushes-inflation-to-3-5","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/bank-of-england-preview-first-hike-to-4-expected-as-energy-pushes-inflation-to-3-5-441596\/","title":{"rendered":"Bank of England preview: first hike to 4% expected as energy pushes inflation to 3.5%"},"content":{"rendered":"<div>\n<p dir=\"ltr\">With a hike almost fully priced, sterling\u2019s reaction will hinge on the vote split and guidance, with a 7-2 outcome and cautious language the most likely route to a softer pound. Gilts could rally if the Bank pushes back on market pricing for several more hikes, particularly at the short end. Oil is the swing factor beyond today: renewed strength in crude and gas would keep pressure on the Bank to tighten further, while any easing in Middle East tensions would weaken the case for a second move. The updated inflation projections will be scrutinised for how much of the energy shock the Bank expects to persist into 2027.<\/p>\n<p dir=\"ltr\">&#8211;<\/p>\n<p dir=\"ltr\">\nThe Bank of England is set to hike; what it says about the next one will matter more.<\/p>\n<p dir=\"ltr\">Summary:<\/p>\n<ul dir=\"ltr\">\n<li>The BoE is widely expected to lift Bank Rate by 25 basis points to 4%, at 12:00 GMT (07:00 ET)<\/li>\n<li>It held at 3.75% in September in a 6-3 vote, with three members favouring a hike<\/li>\n<li>UK CPI rose to 3.5% in September from 3.1%, driven by fuel costs<\/li>\n<li>Goldman Sachs expects a 7-2 vote, with the committee ready to respond but giving no strong steer<\/li>\n<li>Many economists see one more hike, to 4.25%, early next year, less than markets price<\/li>\n<li>New forecasts are likely to show inflation peaking above 4% in early 2027<\/li>\n<\/ul>\n<p dir=\"ltr\">\n<p dir=\"ltr\">\nThe Bank of England is widely expected to raise interest rates on Thursday for the first time in this cycle, lifting Bank Rate by 25 basis points to 4% as energy costs push UK inflation further above target, with the decision due at 12:00 GMT (07:00 ET).<\/p>\n<p dir=\"ltr\">The move would follow a closely divided September meeting, when the Monetary Policy Committee held Bank Rate at 3.75% in a 6-3 vote, with three members already favouring a rise to 4%. Since then, the inflation picture has deteriorated. Consumer prices rose 3.5% in the year to September, up from 3.1% in August and higher than expected, driven largely by rising fuel costs.<\/p>\n<p dir=\"ltr\">Markets have almost fully priced in a hike, and research houses are close to unanimous. Goldman Sachs expects a 7-2 vote in favour, a split shared by much of the consensus, with the two likely dissenters preferring to hold. Some forecasters see a narrower margin.<\/p>\n<p dir=\"ltr\">The more important question for markets is what comes next. Money markets have priced in several further increases over the coming year, a path many economists consider too aggressive. The more common base case is one additional quarter-point rise early next year, taking Bank Rate to 4.25%, possibly in February, when inflation is projected to peak. Goldman expects the committee to signal readiness to respond if inflation pressure builds, but without a strong steer on future meetings.<\/p>\n<p dir=\"ltr\">This is also a forecast meeting, with the Bank publishing an updated Monetary Policy Report. Its new projections are likely to show a higher near-term inflation peak in the first half of 2027, with Goldman expecting it at above 4%. Oil and gas prices are now running above the adverse scenario the Bank set out in July, raising the risk that the Middle East conflict leaves a more lasting mark on UK inflation.<\/p>\n<p dir=\"ltr\">That is the central concern for the hawks. Underlying measures remain firm, with services inflation approaching 4%, and the key risk is that higher energy costs become embedded in wages and price-setting. Against that, wage growth has been described as soft and the consumer is under pressure, giving the doves grounds for caution.<\/p>\n<p dir=\"ltr\">For sterling and gilts, the guidance and vote split are likely to matter more than the hike itself. A cautious message alongside a widely expected increase could see markets pare back their more aggressive pricing, while any sign of a faster pace would reinforce it.\u00a0<\/p>\n<p dir=\"ltr\">\n<p>                            This article was written by Eamonn Sheridan at investinglive.com.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>With a hike almost fully priced, sterling\u2019s reaction will hinge on the vote split and guidance, with a 7-2 outcome and cautious language the most likely route to a softer pound. Gilts&hellip;<\/p>\n","protected":false},"author":216,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[86],"tags":[],"class_list":["post-441596","post","type-post","status-publish","format-standard","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/441596","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/users\/216"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/comments?post=441596"}],"version-history":[{"count":0,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/441596\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/media?parent=441596"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/categories?post=441596"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/tags?post=441596"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}