Mitsubishi UFJ expects the Bank of England to raise policy rates by 25bp at its
next meeting and again in February, taking the peak to 4.25%. It warns rising
energy costs will feed through to household bills and lift UK headline inflation
above 4% in coming months. Energy prices have stayed higher for longer and risen
further recently; with a stabilizing labor market, resilient growth and
Elevated underlying inflation, the BoE will find it hard to ignore the shock.
MUFG forecasts UK Q3 GDP growth of about 0.65% QoQ and expects 2026 and 2027 GDP
growth of 1.5% and 1.4% respectively, above IMF projections. Higher borrowing
costs may have cut fiscal headroom ahead of the budget to around £15bn.
