{"id":827119,"date":"2026-03-15T09:32:21","date_gmt":"2026-03-15T09:32:21","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/827119\/"},"modified":"2026-03-15T09:32:21","modified_gmt":"2026-03-15T09:32:21","slug":"uk-interest-rate-cut-off-the-table-amid-middle-east-conflict-economists-say","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/827119\/","title":{"rendered":"UK interest rate cut off the table amid Middle East conflict, economists say"},"content":{"rendered":"

\"The The Bank of England will announce its next decision on interest rates on Thursday (Yui Mok\/PA) (PA Wire) <\/p>\n

Soaring energy prices caused by the war in Iran<\/a> means an interest rate cut next week \u201cmakes no sense\u201d, with future reductions also hanging in the balance, economists have said.<\/p>\n

Economists have changed their opinion on what will happen to interest rates following the escalation of conflict in the Middle East<\/a>.<\/p>\n

Most are now expecting the Bank of England\u2019s Monetary Policy Committee<\/a> (MPC) to keep borrowing costs unchanged at 3.75% at its next announcement on Thursday, having previously guided towards a cut.<\/p>\n

\"\" <\/p>\n

The pivot reflects the changing outlook for energy costs on the back of soaring oil and gas prices in recent weeks, and the potential for this to weigh on UK inflation.<\/p>\n

The Bank had previously been expecting Consumer Prices Index (CPI) inflation to fall close to 2% by April, but experts say price rises could accelerate towards the second half of the year should higher wholesale gas and oil prices feed through into steeper household electricity and fuel costs.<\/p>\n

The Office for Budget Responsibility (OBR), the Government\u2019s official forecaster, warned earlier this week that one percentage point could be added to UK inflation this year, should the current energy price spike persist.<\/p>\n

Edward Allenby, senior UK economist for Oxford Economics, said: \u201cThe UK inflation outlook was starting to brighten, but the conflict in the Middle East has thrown a spanner in the works.<\/p>\n

\u201cAgainst this backdrop, it\u2019s almost certain that the MPC<\/a> will keep bank rate unchanged at 3.75% at the March meeting.<\/p>\n

\u201cIf the shock proves short-lived and recent price rises fully reverse, we still think there\u2019s a reasonable chance that the MPC will resume its cutting cycle either in April or June.<\/p>\n

\u201cHowever, if the surge in energy prices persists or goes higher, the MPC will be set for an extended pause.\u201d<\/p>\n

Thomas Pugh, chief economist for RSM UK, agreed that the recent events will have taken a rate cut off the table this month, and potentially also for April.<\/p>\n

He said: \u201cReflecting the scale of volatility we\u2019re all coming to terms with, it was only two weeks ago that a March rate cut looked like a dead cert.<\/p>\n

\u201cA cut clearly makes no sense now.<\/p>\n

\u201cGiven uncertainty about the outlook for energy prices, inflation and the economy, the most sensible thing for the Bank of England to do now is wait for more clarity.<\/p>\n

\u201cThis rules out a rate cut next week and probably one in April too, unless there\u2019s a rapid resolution to the crisis.\u201d<\/p>\n

A wave of Britain\u2019s biggest lenders have been hiking mortgage rates on the back of the conflict, prompted by a sharp rise in swap rates, which are used to price mortgages.<\/p>\n","protected":false},"excerpt":{"rendered":"The Bank of England will announce its next decision on interest rates on Thursday (Yui Mok\/PA) (PA Wire)…\n","protected":false},"author":2,"featured_media":827120,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[3,4],"tags":[936,3349,748,237584,6643,393,4884,52790,78137,1144,2662,712,237585,16,15,1764],"class_list":["post-827119","post","type-post","status-publish","format-standard","has-post-thumbnail","category-uk","category-united-kingdom","tag-bank-of-england","tag-bank-rate","tag-britain","tag-conflict-in-the-middle-east","tag-energy-prices","tag-england","tag-great-britain","tag-interest-rate","tag-mpc","tag-northern-ireland","tag-oil-prices","tag-scotland","tag-soaring-energy-prices","tag-uk","tag-united-kingdom","tag-wales"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/116232503178098595","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/827119","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=827119"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/827119\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/827120"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=827119"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=827119"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=827119"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}