Finance
BofA delays BoE rate-cut call to June as energy prices revive inflation risks
Published by Global Banking & Finance Review®
Posted on March 13, 2026
2 min readLast updated: March 13, 2026
Quick Summary
Bank of America has pushed back its forecast for the Bank of England’s first rate cut from March to June, citing surging energy prices—driven by the Iran war, which sent Brent crude briefly near $120 a barrel—as a renewed inflation risk that clouds the BoE’s easing outlook.
BofA Delays Bank of England Rate-Cut to June amid Renewed Inflation Risks
Bank of England Rate-Cut Outlook and Inflation Concerns
BofA Revises Rate-Cut Timeline
March 13 (Reuters) - BofA Global Research, which had expected the Bank of England to begin cutting rates in March, has now pushed its call to June, saying rising energy prices have revived inflation risks and clouded the policy outlook.
The Wall Street brokerage, which had earlier pencilled in a cut in March and June, now expects quarter-point reductions in June and September this year.
Impact of Geopolitical Tensions on Inflation
The shift comes as higher energy prices, driven by geopolitical tensions in the Middle East, heighten uncertainty around inflation and the BoE's rate-cut trajectory.
The conflict has upended near-term expectations for inflation, which slowed to 3.0% in January and had been projected to drift toward the BoE's 2% target in the coming months.
Energy Prices and Market Response
Meanwhile, Brent crude is back above $100 a barrel, after nearly touching $120 earlier this week.
"We could see an earlier cut in April if energy prices move reversely by then, but risks are for further delays and lesser number of cuts this year if the conflict is prolonged," BofA said.
Central Bank Policy and Market Expectations
The BoE is likely to maintain its easing bias but will stress that uncertainty has increased, while the bar for any policy tightening remains high, it added.
Goldman Sachs, Standard Chartered and Morgan Stanley have also delayed their Bank of England easing forecasts, now expecting the first cut in the second quarter as the Iran war lifts energy prices and inflation risks.
Growth and Labour Market Considerations
"Judgement around further policy easing will become an even closer call," BofA said in a note on Thursday, pointing to downside risks for growth and a weaker labour market as the key factors shaping the central bank's decisions.
Inflation Projections for the UK
Britain's inflation rate could end the year at around 3%, rather than the roughly 2% rate assumed by the country's fiscal forecasters, if energy prices remain at current levels, an official at the Office for Budget Responsibility said.
(Reporting by Akriti Shah in Bengaluru; Editing by Sumana Nandy)
Key Takeaways
- •BofA now expects two quarter-point rate cuts in June and September, delaying its prior March forecast due to revived inflation risks from rising energy prices.
- •Brent crude climbed above $100 and surged near $120 amid Middle East tensions over the Iran conflict, intensifying inflation uncertainty and complicating BoE’s policy trajectory.
- •Other major banks including Goldman Sachs, Standard Chartered, and Morgan Stanley have also delayed their BoE easing forecasts to the second quarter, highlighting growing uncertainty around inflation and growth.
Frequently Asked Questions about BofA delays BoE rate-cut call to June as energy prices revive inflation risks
1What factors are impacting the Bank of England's interest rate decisions?
Higher energy prices from Middle East tensions, increased inflation risks, and a weaker labour market are impacting BoE's decisions.
2What is the current outlook for UK inflation based on energy prices?
If energy prices stay high, UK inflation could remain around 3% by year-end, above the BoE's 2% target.
3When are the next expected Bank of England rate cuts according to BofA?
BofA expects the next BoE interest rate cuts in June and September 2024, with the possibility of fewer cuts if energy prices remain high.
