Middle East Conflict Influences UK Interest Rate Expectations

The ongoing conflict in the Middle East has led to a surge in energy prices, raising concerns about high inflation and impacting investor expectations regarding interest rate cuts by the Bank of England. According to Jin10, Paul Dales from Capital Economics stated in a report that the Bank of England is more likely to delay interest rate cuts rather than cancel them altogether. Data from LSEG indicates that the probability of a rate cut at the Bank of England's policy meeting on March 19 has dropped to 5%, down from 83% before the outbreak of the Middle East conflict. Capital Economics anticipates that the Bank of England will maintain the interest rate at 3.75% in its March, April, and June rate decisions.