Bank Of England to Hold Interest Rates This Year, but a Strong Minority See A Hike

• The Bank of England will leave its key interest rate unchanged at 3.75% on June 18, according to all 65 economists polled by Reuters, who remained uncertain about ​what the central bank will do later this year.
• Bank Rate will stay where it is through the ‌rest of this year, according to median forecasts in the June 5 to 12 polls, but nearly 40% of respondents predicted at least one hike. Only six expected a 25-basis-point cut by the end of the year. Governor Andrew ​Baileysaid earlier this month it was important to get inflation back to target and give households confidence about the ​central bank's ability to do so.
• Fellow BoE policymaker Megan Greenesaid last week she saw a growing case for raising interest rates as the Iran war drags on and boosts the chance of wide-ranging rises in prices across the economy.
• British inflation was seen peaking at 3.6% towards the end ​of this year, getting close to double the central bank's 2% target. It will average 3.3% across 2026 but ease to 2.6% in ‌2027. Prices ⁠have jumped as the U.S.-Israeli war with Iran led to soaring energy costs and disrupted shipping lines through the key Strait of Hormuz. Still, hopes grew on Friday for peace after U.S. President Donald Trump said a deal could be signed as soon as this weekend.
• Economic growth will be ​1.0% this year - revised up from a 0.8% projection in a May poll - and ​1.1% in 2027 ⁠before expanding 1.5% in 2028, the poll found. Earlier this month, the OECD nudged up its 2026 forecast for Britain to 0.9% from the 0.7% it predicted just after the Middle East conflict broke out.
• Firms in the country's dominant services industry suffered a small fall ⁠in ​activity in May as the strains of the Iran warpushed up costs ​sharply, a key surveyshowed last week. The economy contracted 0.1% in April, its first monthly drop since August, official data showed earlier on Friday.

(Source: Reuters)