Mar. 12 at 3:48 PM
Bank of America now expects the Bank of England to hold interest rates at 3.75% in March, delaying its earlier forecast for a cut, as rising energy prices increase inflation uncertainty.
The bank said the BoE will likely wait to assess whether the energy-price shock is temporary, expecting a 7–2 vote to keep rates unchanged. Rate cuts are now projected for June and September, instead of March and June.
Despite the delay, BofA noted that monetary policy remains restrictive, wage growth is slowing, and labor-market conditions are weakening. However, the outlook depends heavily on how long energy prices remain elevated due to geopolitical tensions.
If energy prices ease quickly, earlier cuts could return to the agenda, but a prolonged surge could reduce the number of cuts—or potentially eliminate them this year. BofA added the BoE will likely maintain an easing bias while emphasizing that the threshold for rate hikes remains high.
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