Bank of America forecasts BOE rate hikes in November 2026 and February 2027
In brief
- Bank of America forecasts two 25-basis-point BOE rate hikes in November 2026 and February 2027.
- Forecast reverses BofA's June projection of no 2026 hikes, driven by inflation concerns.
- J.P. Morgan and Barclays project a similar BOE monetary policy path.
- LSEG data shows 63% probability priced in for November 2026 BOE rate hike.
- Geopolitical tensions and inflation risks above 4% in early 2027 drive revised outlook.
A Sharp Reversal in Three Months
Back in June, Bank of America revised its 2026 BOE outlook, scrapping earlier projections for two hikes and instead forecasting the central bank would hold rates steady at 3.75% for all of 2026. At that point, the bank saw only a single 25-basis-point cut arriving in November 2027.
By mid-September 2026, the inflation picture had shifted. Major brokerages started penciling in hikes again, driven by concerns that inflation could push past 4% in early 2027. Bank of America Global Research now expects the Bank of England to raise interest rates by 25 basis points in both November 2026 and February 2027, aligning its view with competitors.
Consensus Forming Around Rate Tightening
The forecast places BofA alongside major financial institutions. J.P. Morgan, Barclays, and UBS have all projected a similar BOE rate hike path for November 2026 and February 2027. Market pricing reflects this shift as well. LSEG data shows a 63% probability priced in for a BOE rate hike at the November 2026 meeting.
Two 25-basis-point hikes would push the BOE's policy rate to 4.25%, reversing the gradual easing that characterized earlier 2026. For context, the BOE had been on a gradual easing path earlier in 2026, bringing rates down to 3.75%.
Precaution, Not Conviction
BofA frames the potential tightening carefully. The bank has characterized any potential 2026 hike as a "close call" and views possible tightening as precautionary. Geopolitical tensions arising from the Middle East have added another layer of uncertainty, as energy price shocks from that region can shift inflation expectations.
The reversal underscores how volatile the UK monetary policy landscape has become. UK inflation had come in at 2.8% in May, below economists' expectations, yet the outlook deteriorated sharply within weeks. This kind of whiplash—from no 2026 hikes to two hikes—illustrates just how uncertain the central bank's path remains.
