Deutsche Bank forecasts no change in UK rates this year but warns prolonged energy shocks may force tightening.
The Bank of England is expected to keep its benchmark rate at 3.75% at the June meeting, marking a fourth consecutive hold. A 7–2 vote is likely, with Huw Pill and Megan Greene favoring a hike amid rising inflation risks from sustained energy price pressures.
Analysts had previously anticipated no rate changes for 2024, but the prolonged energy shock is increasing the likelihood of tightening. Current market expectations reflect a shift, with policymakers likely viewing the current stance as appropriate for now.
Deutsche Bank maintains its forecast for rates to remain at 3.75% until spring 2025, followed by a gradual easing cycle to 3.25%, the estimated neutral rate. However, risks are skewed toward higher rates if energy prices persist at elevated levels.