ING: Bank of England's Potential November Rate Hike Hinges on Energy Prices Staying Elevated

12:01 PM EDT, 09/17/2026 (MT Newswires) -- ING expects the Bank of England to "reluctantly" increase its key rate in November 2026 if energy prices remain high amid the ongoing Middle East war, along with another potential hike in February 2027. "The Bank of England has voted 6-3 in favour of keeping rates on hold at 3.75%, but the overriding message is clear: it is prepared to hike interest rates if energy prices stay high. The chances of a November hike hinge entirely on whether oil and natural gas prices come lower," the research firm said in a Thursday quick take note, following the BoE's September meeting. "Our global base case assumes that they will. That would enable the Bank to stay on hold, as it voted to do today, and even cut rates in 2027." "But if we're wrong, it's clear the Bank is prepared to hike in November - and if it does, we suspect it will do so again in the new year. It's as simple as that. But either way, it suggests market pricing of four rate hikes over the next year looks overdone." ING also highlighted the UK central bank's current forecast of second-round effects being more likely to materialize if inflation moves above 4%. At the moment, however, the higher fuel and household energy costs have yet to spill over "into other parts of the inflation basket." "[If] the Bank does decide to hike rates, as Governor Andrew Bailey suggested today it could, it won't be because of the economic data between now and November. Instead, it will be an insurance hike - and it's interesting that those voting for a rate increase at today's meeting continue to characterise it through the lens of 'risk management'," analysts added.