Franklin Templeton strategist Michael Browne said markets have effectively done
much of the tightening for the 2026 MPC: elevated UK gilt yields and higher
borrowing costs have tightened financial conditions without Bank of England
intervention. He said that is unlikely to change as the Iran conflict lifts
Household energy bills, a new government’s fiscal plans remain uncertain and
drought boosts food prices, keeping upside inflation risk. Markets are therefore
likely to maintain tighter financial conditions. Investors now price at least
one Bank of England hike before year-end and another by next spring, especially
as expectations of further U.S. tightening build; Browne added the MPC is being
pushed by shifting conditions rather than managing a delicate balance.
