Inflation Concerns Force BoE Rate Cut Delays: BofA's New Forecast

Bank of America Global Research has adjusted its forecast for the Bank of England's interest rate cuts due to revived inflation risks from rising energy prices. The new projection delays rate cuts to June and September as geopolitical tensions escalate, impacting the BoE's monetary policy outlook.

Bank of America Global Research has revised its forecast for the Bank of England's interest rate cuts, originally expected to start in March, pushing them to June. The change comes amid rising energy prices that have revived inflation risks and muddied the policy outlook.

The increases in energy prices, spurred by geopolitical tensions in the Middle East, have fueled uncertainty around inflation and the BoE's rate-cut strategy. While inflation had eased to 3.0% in January, it was anticipated to converge towards the BoE's 2% target soon.

Brent crude prices rebounded above $100 a barrel, potentially hindering rate cuts. The Bank of England might maintain its easing bias but highlight increased uncertainty, with Goldman Sachs and other financial institutions also postponing their rate cut forecasts to the second quarter due to inflation risks.