Sept 14 (Reuters) - Goldman Sachs on Monday turned more hawkish on the Bank of England, forecasting a 25-basis-point rate hike in November 2026 as inflation persists and growth holds up.
The bank had previously expected rates to remain unchanged throughout 2026.
"Recent weeks have seen significant increases in wholesale energy prices, a larger rise in headline inflation than the Bank had expected, and strong growth data," Goldman Sachs analysts said in a note.
Rising energy prices have added to concerns about Britain's inflation outlook, with oil climbing above $100 a barrel due to renewed hostilities in the Middle East.
Earlier this month, data showed Britain's economy expanded at its fastest annual pace in 18 months in July, supported by artificial intelligence and continued momentum from a strong first half.
In line with consensus, Goldman expects BOE to keep the bank rate unchanged at 3.75% at its September 17 meeting.
The brokerage said the BOE is likely to hold rates after a November hike as easing energy prices reduce the need for further tightening, before beginning rate cuts in late 2027.
Traders price in 47 basis points of rate hikes by the Bank of England by year-end, LSEG data showed.
Last week, ECB hiked their interest rates for the second time this year.
Traders are also squarely focused on interest rates decisions from the Federal Reserve and the Bank of Japan later this week.
Reporting by Kanishka Ajmera in Bengaluru; Editing by Nivedita Bhattacharjee
