Bank of England to raise rates four times by July 2027, markets price in

September 11, 2026 at 11:00 PM2 min

This digest was compiled by AI from multiple sources — links to the originals are below.

The Bank of England is expected to raise interest rates four times by July 2027, lifting the Bank rate from 3.75% to 4.75%, according to money market pricing. The forecast follows UK GDP growth of 0.4% in July, which beat expectations of stagnation. The Monetary Policy Committee is expected to leave rates unchanged at its meeting next week, even as markets price in a hike in November.

Key Facts

Money markets are pricing in four quarter-point rate hikes by July 2027, taking the Bank rate from 3.75% to 4.75%.
UK GDP grew 0.4% in July, defying forecasts that growth would stall.
The Monetary Policy Committee is expected to leave rates unchanged at its meeting next week.
The yield on 10-year gilts fell two basis points to 5.351% on Friday morning after hitting 19-year highs on Thursday.
Brent crude dropped more than 2.5% on Friday morning to below $105 per barrel.

Rate Hike Expectations

City figures expect the Bank of England to hike interest rates as many as four times within the next year. Andrew Bailey is widely tipped to oversee an interest rate hike in November, economists have said. The Monetary Policy Committee is expected to leave rates unchanged when it meets next week. Money markets are now pricing in four quarter-point hikes by July next year, which would see the Bank rate rise from 3.75 per cent today to 4.75 per cent in less than 12 months.

GDP Surprise

The UK economy grew by 0.4 per cent in July despite forecasts that growth would grind to a halt. Economists had expected summer spending boosts caused by the heatwaves and the World Cup to recede in July. Friday’s GDP figures are evidence that the UK economy could withstand a hike to rates this year, analysts have said. Andrew Wishard, an economist at Berenberg, said evidence that the economy could cope with a solitary 25bp interest rate hike adds to the risk that the BoE will deliver one in November or December.

Market Reaction

UK borrowing costs eased on Friday morning after reaching 19-year highs on Thursday. The yield on 10-year gilts fell two basis points to 5.351 per cent. Oil prices surged earlier this week, though Brent crude dropped back by more than 2.5 per cent on Friday morning to below $105 per barrel. Angeline Ong, senior tech analyst at broker IG, said the upside surprise hands ammunition to BoE hawks pushing for a Q4 rate hike, even as gilt yields already sit at multi-decade highs on Middle East shipping attacks and firm US data.