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BoE Policymaker Alan Taylor Signals No Need for Interest Rate Hike Amid Iran War Inflation Risks 
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Supreme Court Backs Lisa Cook, Defends Federal Reserve Independence Against Trump Firing Attempt 
Trump Questions Housing Bill as He Prioritizes SAVE America Act 
Malaysia Central Bank Moves to Support Ringgit Amid Foreign Fund Outflows 
BOJ Rate Hike Expected to Boost Yen, Impact USD/JPY and Nikkei 
ECB Keeps July Rate Options Open Amid Iran War Energy Price Risks 
China Sets 1.25% Overnight Reverse Repo Rate Below Market Expectations 
The Bank of England (BoE) is widely expected to keep interest rates unchanged this week as policymakers assess the growing economic risks tied to the ongoing Iran war and rising inflation pressures. After maintaining borrowing costs at 3.75% in March, the central bank is likely to adopt a cautious stance again, balancing concerns over economic slowdown with persistent inflation threats.
Financial markets, however, are signaling a different outlook. Investors are increasingly betting on potential rate hikes later this year, with expectations of incremental increases starting as early as July, followed by possible moves in September. Despite these projections, BoE Governor Andrew Bailey has indicated that raising rates too soon could be premature given the uncertain economic environment.
Economists remain divided. A Reuters poll suggests most analysts expect the Monetary Policy Committee (MPC) to vote overwhelmingly—possibly 8-1—to hold rates steady. Still, some policymakers may push for a proactive increase to 4.0% to curb inflation risks, especially as memories of the UK’s inflation surge above 11% in 2022 remain fresh.
The UK economy is particularly sensitive to rising energy prices due to its heavy reliance on natural gas. Recent data highlights a sharp increase in business input costs and record-high expectations for future price hikes, raising concerns about sustained inflation. The International Monetary Fund forecasts UK inflation could peak at 4% this year, reinforcing the pressure on policymakers.
BoE Chief Economist Huw Pill recently emphasized the risks of waiting too long to act, noting that delayed responses could worsen inflation outcomes. Meanwhile, other MPC members are weighing weakening consumer confidence, slower hiring, and broader economic uncertainty.
With limited clarity on how long the Iran war will disrupt global energy markets, the BoE is expected to reiterate its readiness to respond if conditions worsen. Updated economic forecasts due this week will likely show higher inflation and weaker growth through 2026 and 2027. For now, the central bank appears focused on gathering more data before making any decisive policy shifts.
