Goldman Sachs has revised its Bank of England interest-rate forecast and now expects a 25-basis-point increase in November 2026, citing higher inflation and continued economic growth.
The bank had previously forecast that UK interest rates would remain unchanged throughout 2026.
Goldman analysts said recent developments included increases in wholesale energy prices, a larger rise in headline inflation than the Bank of England had expected and stronger economic growth data.
Higher Energy Prices Affect Inflation Outlook
Oil prices have risen above $100 a barrel amid renewed hostilities in the Middle East, contributing to higher energy costs and changes in expectations for UK inflation.
UK economic data released earlier this month showed that the economy recorded its fastest annual growth rate in 18 months in July, supported by activity related to artificial intelligence and continued growth following the first half of the year.
Bank Rate Expected to Remain at 3.75% in September
Goldman expects the Bank of England to leave Bank Rate unchanged at 3.75% at its 17 September meeting, in line with consensus expectations.
The bank then forecasts a 25-basis-point increase in November.
Following the expected November move, Goldman forecasts that the Bank of England will keep rates unchanged as energy prices ease, before beginning to reduce interest rates in late 2027.
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