Finance
J.P. Morgan Sees BoE Staying on Extended Pause
Published by Global Banking & Finance Review®
Posted on March 17, 2026
2 min readLast updated: March 17, 2026
Quick Summary
J.P. Morgan now expects the Bank of England to keep interest rates unchanged through 2026, abandoning earlier calls for cuts in April and June, due to upward revisions to UK inflation driven by higher gas prices, and sees the next cut arriving only in early 2027.
J.P. Morgan sees BoE staying on extended pause with next cut in 2027
J.P. Morgan Revises Bank of England Rate Cut Forecast Amid Inflation Concerns
Forecast Changes and Rationale
March 17 (Reuters) - J.P.Morgan on Tuesday pushed back its forecast for the Bank of England's next interest rate cut to the first quarter of 2027, pointing to inflation pressures caused by higher energy prices.
The brokerage had previously expected a 25‑basis-point cut each in April and June.
Impact of Global Events on Energy Prices
J.P. Morgan's forecast shift comes as the ongoing Middle East conflict and the effective closure of the Strait of Hormuz lift global energy prices. That could drive renewed inflation risks across Europe, prompting several major brokerages to push back their BoE policy trajectory.
Barclays on Monday also forecast no rate cuts this year.
Inflation and Economic Outlook
Extended Pause and Inflation Targets
J.P. Morgan said the central bank is now likely to enter an "extended pause" as elevated energy costs could potentially delay the return of BoE's inflation target to 2%.
The brokerage lifted its fourth-quarter average inflation forecast to 2.9% from 2.2%, warning inflation may not normalise until well into 2027.
UK GDP Growth Forecast
J.P. Morgan also cut its 2026 UK GDP growth forecast to 0.6% from 0.8%, citing real-income pressure from higher energy bills, which are set to rise sharply in July and remain elevated into next winter.
Upcoming Monetary Policy Meeting
Market Expectations
The central bank's next monetary policy meeting is scheduled on Wednesday and traders are betting on a 98.1% chance for rates to remain unchanged, per data compiled by LSEG.
Brokerage Commentary
"We think the BoE will acknowledge that rates are still restrictive at this week’s meeting, and retain a mild easing bias. But the prospect of further easing is likely to be pushed well away from the BoE’s near-term agenda," the brokerage added.
(Reporting by Rashika Singh in Bengaluru; Editing by Mrigank Dhaniwala and Devika Syamnath)
Key Takeaways
- •J.P. Morgan has dropped its prior forecasts for April and June 2026 rate cuts and now anticipates an “extended pause” with rates unchanged through 2026.
- •The shift follows a marked upward revision in UK inflation projections, largely driven by elevated gas prices delaying disinflation to the BoE’s 2% target.
- •J.P. Morgan forecasts the first Bank of England rate cut will occur in the first quarter of 2027, underscoring a more cautious approach amid persistent inflation risks.
Frequently Asked Questions about J.P. Morgan sees BoE staying on extended pause
1When does J.P. Morgan anticipate the next rate cut?
J.P. Morgan expects the next Bank of England rate cut only in the first quarter of 2027.
2What is the reason behind the 'extended pause' in BoE interest rates?
Higher gas prices are delaying the return of inflation to the BoE's target, prompting an extended pause.
