Will the U.K. energy shock complicate the BoE’s rate-cut plans? in World Economy News 04/03/2026 A surge in energy prices is expected to push UK inflation higher while weakening economic growth, creating a challenging situation for the Bank of England as it considers further interest rate cuts, according to J.P. Morgan’s latest analysis. Oil prices have climbed to $78 per barrel from an earlier assumption of $65, which could add approximately 0.2 percentage points to the Consumer Price Index this year if sustained. The increase would affect liquid fuels used for transport and is expected to show up in inflation within one to two months. prices have also risen significantly, with one-year ahead pricing increasing by around 22% from approximately 77 pence to 95 pence per therm. This would be sufficient to add around 0.3% to the CPI when it feeds through to consumer energy bills in June, the next time the quarterly Ofgem price cap can reflect recent market price changes. The April cap has already been set. J.P. Morgan’s baseline forecast shows the annual rate of CPI inflation falling from 3.1% in March to 2.2% by April, largely reflecting fiscal and regulated price changes, including lower energy bills. However, if current market pricing persists, the recent energy shock might be expected to lift the annual rate of CPI inflation by around 0.6 percentage points by July, leaving inflation running around 2.7% year-over-year rather than the forecasted 2.1% for the third quarter. In a note published on Monday the bank noted that second-round effects should also be considered, which the BoE has previously argued may be greater during times of high inflation. The current shock is viewed as a supply-side disruption that will have adverse consequences for growth. The inflation shock described might be expected to lower growth by 0.2% to 0.3%, though this will depend on how much households choose to smooth through the shock. The Bank of England will need to weigh a potentially higher inflation profile against a weaker outlook for growth and the labour market. While the balance of these forces may still justify further rate cuts, fears over second-round effects and uncertainty could make the BoE more hesitant. J.P. Morgan maintains its March forecast for the next rate cut given events are still moving quickly, but noted the odds of a later cut have risen. If market pricing held around current levels for long enough, the Bank may want to see key April CPI and wage data before cutting, implying a pause until June. Source: Investing.com 2026-03-04 hellenicshippingnews... window.___gcfg = {lang: 'en-US'}; (function(w, d, s) { function go(){ var js, fjs = d.getElementsByTagName(s)[0], load = function(url, id) { if (d.getElementById(id)) {return;} js = d.createElement(s); js.src = url; js.id = id; fjs.parentNode.insertBefore(js, fjs); }; load('//connect.facebook.net/en/all.js#xfbml=1', 'fbjssdk'); load('https://apis.google.com/js/plusone.js', 'gplus1js'); load('//platform.twitter.com/widgets.js', 'tweetjs'); } if (w.addEventListener) { w.addEventListener("load", go, false); } else if (w.attachEvent) { w.attachEvent("onload",go); } }(window, document, 'script')); tweet Share