ING economists say a July rate increase remains possible if energy flows through the Strait of Hormuz do not stabilize.
The Bank of England is unlikely to raise interest rates in June as weaker UK economic data and lower oil prices reduce immediate pressure on policymakers. Analysts note that inflation risks have eased, though energy market fragility could still prompt action later in the summer.
Earlier expectations for a June hike have faded, with energy markets now aligning between the BoE’s April scenarios, neither of which automatically justified rate increases. Inflation is projected to peak at 3.7% in September before stabilizing near 3.5% into next spring, assuming no further disruptions.
A July rate hike remains on the table if the Strait of Hormuz remains disrupted, with more policymakers likely to support tightening later this month. The BoE’s base case currently favors a prolonged pause, but energy risks could shift the outlook.