Lower energy prices could limit the Bank of England’s rate increases
Markets see a 91% chance of a November BOE hike, while a sustained retreat in energy prices could reduce pressure for faster tightening.
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what happened
The Bank of England may pursue a more measured path for interest-rate increases in the coming months if energy costs retreat substantially from their current levels. Dow Jones Newswires, citing a note from AJ Bell’s Russ Mould, reports that such a decline could reduce the need for rapid monetary tightening.
LSEG data indicate that investors are assigning a 91% probability to a BOE rate increase at its November meeting. Markets are also pricing in three additional hikes by July 2027. Oil initially edged lower in early Monday trading after reports of a U.S. agreement with Russia to supply diesel, before reversing direction. Brent was last 2.1% higher at $106.90 a barrel.
why it matters
Energy prices are a key input into expectations for UK inflation and interest rates. A sustained fall in fuel costs could ease pressure on the Bank of England, while elevated crude prices reinforce expectations of further policy tightening.
instruments
sources
- BOE Could Avoid Sharp Rate Rises If Energy Prices Recede — Market Talk — Dow Jones Newswires, 12 October 2026 at 13:57 UTC
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