Updates with J.P. Morgan's forecast
March 16 (Reuters) - Major brokerages including Goldman Sachs and Morgan Stanley have pushed back expectations of a Bank of England rate cut, now seeing the central bank on hold in March as the U.S.-Israeli war on Iran drives up energy prices and inflation risks.
J.P. Morgan on Tuesday forecast the central bank to deliver the next rate cut in the first quarter of 2027. It earlier expected two 25-basis-point cuts in April and June.
The shift shows how quickly the conflict has upended market assumptions, with analysts warning that sustained rises in oil and gas costs could keep the BoE on hold longer than previously expected.
Economists polled by Reuters have dropped their expectations of a Bank of England rate cut in March and now see a 25-basis-point move in April or June. Before the start of the war on February 28, a March cut to 3.5% was seen as a near certainty.
Brokerage | Pre-conflict policy outlook | Post-conflict policy outlook | Terminal rate by year-end 2026 |
BofA Global Research | 2 (March and June) | 2 (June and September) | 3.25% |
Deutsche Bank | 2 (March and June) | 2 (June and Q4) | 3.25% |
3 (March, July and November) | 2 (April and November) | 3.25% | |
Citigroup | 3 (April, June and September) | 2 (June and September) | 3.25% |
Goldman Sachs | 3 (March, June and September) | 2 (July and November) | 3.25% |
1 (March) | Nil | 3.75% | |
J.P. Morgan | 2 (April and June) | Nil | 3.75% |
Nomura | 2 (March and June) | 2 (April and July) | 3.25% |
Standard Chartered | March | Cuts in Q2 | - |
UBS Global Research | 2 (March and June) | 2 (April and July) | 3.25% |
Berenberg | 3 | 3 (next in June) | 3.00% |
Barclays | 1 (March) | Nil | 3.75% |
(Reporting by Kanchana Chakravarty, Rashika Singh, Kanishka Ajmera in Bengaluru; Editing by Nivedita Bhattacharjee and Sahal Muhammed)
((Kanchana.Chakravarty@thomsonreuters.com;))