Hesitation: Bank of England Preview

Rabobank expects the Bank of England to hold rates at 3.75% in June but hike to 4.00% in July, driven by anticipated energy price shocks from the Strait of Hormuz closure. The domestic economy faces headwinds from rising unemployment and subdued consumption.

Key Takeaways

• 1.Expect MPC to keep Bank Rate at 3.75% in June due to cooling labor market and lower-than-expected inflation.
• 2.Baseline scenario of continued Strait of Hormuz closure implies energy price pressure, prompting a 25bp hike call for July to 4.00%.
• 3.Growth forecasts revised down to 0.8% for 2026 and 0.7% for 2027 amid negative real income growth.

Table of Contents

• Summary
• Oil, oil, oil
• More inflation, less growth...
• ... but soft April CPI eased pressure
• Still all about oil

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