Fitch economist Jessica Hinds says May headline inflation was 2.8% and this week’s sharp fall in oil prices gives Bank of England policymakers scope to keep rates on hold. She warns next month’s 13% Ofgem price-cap rise will lift H2 inflation, but if the oil decline persists it should prevent a further rise in inflation expectations. Combined with a weakening labour market, Fitch expects rates to remain unchanged through 2026 with easing resuming in 2027.

2026-06-17

Fitch economist Jessica Hinds says May headline inflation was 2.8% and this week’s sharp fall in oil prices gives Bank of England policymakers scope to keep rates on hold. She warns next month’s 13% Ofgem price-cap rise will lift H2 inflation, but if the oil decline persists it should prevent a further rise in inflation expectations. Combined with a weakening labour market, Fitch expects rates to remain unchanged through 2026 with easing resuming in 2027.