Bank of Japan's Ueda Flags Low Real Interest Rates as Key Factor in Rate Hike Timing 
U.S. Sanctions Target Chinese Refinery Over Iranian Oil Purchases 
Asian Stock Markets Rally as Japan and South Korea Hit Record Highs Amid Oil Price Concerns 
RBNZ Holds Rates at 2.25% as Middle East Conflict Fuels Inflation Concerns 
ECB Warns of Rising Inflation Risks Amid Iran War Energy Shock 
Asian Currencies Rise Ahead of BOJ and Fed Meetings as Dollar Softens 
Iran-Pakistan Diplomacy and Strait of Hormuz Tensions Push Oil Prices Above $100 
Chinese Chip Stocks Surge on AI Boom and Domestic Tech Push 
Bank of America Maintains Forecast for Two Fed Rate Cuts in 2026 Despite Inflation Risks 
Federal Reserve Probes Big Banks Over Private Credit Exposure Amid Growing Systemic Risk Concerns 
Bank of Korea Governor Nominee Warns of Action if Korean Won Weakens Further 
Citigroup Delays Fed Rate Cut Forecast Amid Strong Jobs Data and Inflation Concerns 
BOJ Rate Decision in Focus as Yen, Inflation, and Nikkei Hang in Balance 
U.S. and EU Strengthen Critical Minerals Partnership to Reduce China Dependence 
U.S.-Iran Tensions Escalate as Strait of Hormuz Crisis Disrupts Global Oil Markets 
The Bank of England (BoE) is widely expected to keep interest rates unchanged this week as policymakers assess the growing economic risks tied to the ongoing Iran war and rising inflation pressures. After maintaining borrowing costs at 3.75% in March, the central bank is likely to adopt a cautious stance again, balancing concerns over economic slowdown with persistent inflation threats.
Financial markets, however, are signaling a different outlook. Investors are increasingly betting on potential rate hikes later this year, with expectations of incremental increases starting as early as July, followed by possible moves in September. Despite these projections, BoE Governor Andrew Bailey has indicated that raising rates too soon could be premature given the uncertain economic environment.
Economists remain divided. A Reuters poll suggests most analysts expect the Monetary Policy Committee (MPC) to vote overwhelmingly—possibly 8-1—to hold rates steady. Still, some policymakers may push for a proactive increase to 4.0% to curb inflation risks, especially as memories of the UK’s inflation surge above 11% in 2022 remain fresh.
The UK economy is particularly sensitive to rising energy prices due to its heavy reliance on natural gas. Recent data highlights a sharp increase in business input costs and record-high expectations for future price hikes, raising concerns about sustained inflation. The International Monetary Fund forecasts UK inflation could peak at 4% this year, reinforcing the pressure on policymakers.
BoE Chief Economist Huw Pill recently emphasized the risks of waiting too long to act, noting that delayed responses could worsen inflation outcomes. Meanwhile, other MPC members are weighing weakening consumer confidence, slower hiring, and broader economic uncertainty.
With limited clarity on how long the Iran war will disrupt global energy markets, the BoE is expected to reiterate its readiness to respond if conditions worsen. Updated economic forecasts due this week will likely show higher inflation and weaker growth through 2026 and 2027. For now, the central bank appears focused on gathering more data before making any decisive policy shifts.
