Bank of England June rate hike now likely despite April hold in World Economy News 01/05/2026 One month ago, Bank of England Governor Andrew Bailey told us markets were getting ahead of themselves on rate hike pricing. That feels like the underlying message from the April decision, which keeps interest rates at 3.75%. But it’s also clear the Bank is inching closer to a rate hike in June. That’s narrowly now our base case. Like everyone else, the Bank is dealing with the uncertainty through scenarios. Its middle scenario B is largely premised on current market pricing. Oil quickly eases back below 100 USD/bbl, and natural gas stays roughly where we are now through most of this year before moving gradually lower. Crucially, that scenario generates virtually no second round effects on inflation, the Bank thinks; the impact on wage growth is marginal. In that scenario, it seems like most officials are still edging towards keeping Bank Rate on hold this year – even if its model-based simulations, including its policy report, point to one, maybe two hikes, even with energy prices coming swiftly lower. Governor Bailey characterised the decision not to cut, which is what the Bank was likely to have done pre-war, as in effect a decision to tighten policy. The elephant in the room here is that the crisis in the Middle East is showing little sign of resolving. And the chances of us ending up in a less benign scenario are rising. Admittedly, the Bank’s more extreme scenario is indeed extreme. It assumes natural gas prices double – something that feels unlikely right now. And remember that natural gas prices are arguably more important for UK inflation – and the risk of second round effects – than oil. Still, our own base case is a little more aggressive on energy prices than the Bank’s middle scenario – and with every day that passes without the Strait of Hormuz reopening, the more likely it is that energy prices stay more elevated for longer. Our own UK inflation forecasts, peaking a touch above 4% this year, are higher than in the Bank’s middle scenario. That’s why, after today’s decision, we’re now edging towards a hike in June. It’s certainly not guaranteed, but that’s now narrowly our base case, having previously felt rates would stay on hold through this year. Whether that’s followed by one or even two extra hikes, as markets are currently pricing, we’re less convinced right now. It’s clear the majority of the committee are still sceptical about this turning into a persistent bout of inflation, akin to what we saw in 2022. We strongly agree. On balance, we think a June rate hike could be one and done. Source: ING 2026-05-01 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