BofA Global Research expects the Bank of England to maintain its key rate at 3.75% at its April 30 monetary policy meeting, with a 7-2 vote in favor of a hold and risks of an 8-1 vote.
"It is likely to note that upside risks from greater persistence to medium-term inflation have risen, while risks from weaker growth remain. We don't expect the BoE to make strong judgements about whether it is likely to hike or be on extended hold, given uncertainty," analysts said in a Thursday preview note. "But we do expect it to keep the door open to modest hikes if energy prices stay elevated, and say aggressive tightening is unlikely, given labour market/growth concerns. We expect it to rule out near-term cuts."
Looking ahead, the research firm forecasts the UK central bank to raise its benchmark rate twice in 2026 in June and July, with risks of just one rate increase, noting that "it's a close call."
Three quarterly rate cuts to 3.5% are then expected to follow, beginning from the second quarter of 2027, with risks of 3.25%.