Goldman Sachs predicts that the Bank of England will remain on hold for a long time, with the next interest rate cut not expected until 2027.

Goldman Sachs analysts have officially delayed the next interest rate cut by the Bank of England to 2027. Previously, Goldman Sachs had expected the Bank of England to cut interest rates quarterly starting in July, but due to the impact of the Middle East conflict, they now predict that interest rates will remain unchanged throughout 2026 and will only slowly begin to decrease in 2027, with the ultimate target rate being 3%. The core factor leading to this revision of the aggressive forecast is the drastic fluctuation in the international crude oil market. With the increasing risk of the closure of the Strait of Hormuz, Brent crude oil prices have surged to over $119 per barrel, directly threatening price stability in the UK and across Europe. At the meeting on March 19, 2026, the Monetary Policy Committee of the Bank of England unanimously voted 9-0 to maintain the benchmark interest rate at 3.75%, and indicated that inflation rates may rise to around 3.5% in the next two quarters. They also noted that the Bank remains vigilant on the risks of rising inflation expectations becoming entrenched in the economy. Goldman Sachs analysis suggests that with inflation rates likely rebounding to around 3.5% in the next two quarters, the Bank of England will not only refrain from cutting interest rates throughout 2026, but may also face pressure to resume raising rates in the short term, with the earliest possible rate hike window possibly opening in April of this year. This stance has triggered a chain reaction in the financial markets and has been partially corroborated by other mainstream investment banks. JPMorgan also adjusted their forecast, similarly believing that the Bank of England will not loosen policy before 2027; Morgan Stanley also expressed a similar cautious attitude.