BoE likely to pause rates as energy price surge fuels hike speculation

The Bank of England is poised to maintain its Bank Rate at 3.75% at Thursday's meeting, with most Monetary Policy Committee members expected to vote against an immediate hike. Market traders price in about an 80% chance of a quarter-point increase in November, but only one in eight economists in a poll share that expectation. A recent surge in British natural-gas and Brent crude futures - roughly 20% higher this month due to the war in Iran - is pushing inflation forecasts upward and reviving calls for a rate rise, especially after the US Federal Reserve lifted its own rates.

JPMorgan economist Allan Monks argues the energy shock makes a November hike increasingly plausible, while Evercore ISI analysts point to a cooling labour market and elevated market rates that already curb borrowing. Governor Andrew Bailey cautioned against assuming a policy shift, and the BoE is also expected to update its gilt-selling programme, potentially halting sales of long-dated bonds to free fiscal space for Finance Minister John Healey's upcoming budget.