Goldman Sachs expects the Bank of England to lift interest rates twice by February 2027, a path that would bring Bank Rate to 4.25% and likely increase borrowing costs, Reuters reported.
Bank Rate currently stands at 3.75%. Goldman expects a quarter-point increase at the Nov. 5 policy meeting and another at the Feb. 4, 2027, meeting. It also projects no move in December, Reuters reported. The Monetary Policy Committee has yet to make those decisions.
The prospect of higher rates matters to borrowers and savers. The Bank of England says an increase in Bank Rate generally pushes up what banks charge for loans and what they pay on deposits, though those rates do not necessarily change by the same amount. Any such effects depend on decisions the committee has yet to make.
Reuters reported that higher energy prices and stronger economic data informed Goldman’s revised forecast. Official figures show some of the pressures facing the committee: The Office for National Statistics recorded 3.5% annual consumer price inflation in September, up from 3.1% in August. Higher motor fuel prices helped make transport the largest contributor to the increase in the annual inflation rate.
The same agency reported that economic output grew 0.7% over the three months ending in August compared with the previous three months. Inflation remains above the Bank of England’s 2% target.
The Monetary Policy Committee’s September vote showed a split. Six members kept Bank Rate at 3.75%, while three supported lifting it to 4%. The bank warned that prolonged energy price increases might eventually influence wage negotiations and pricing across the economy.
The bank’s published rate history places its most recent increase in August 2023, when Bank Rate reached 5.25%. Its next policy decision and Monetary Policy Report are scheduled for Thursday, Nov. 5, at 7 a.m. ET (12:00 UTC).
