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 stabilising labour market, resilient growth and elevated underlying inflation, the BoE will find it hard to ignore the shock. MUFG forecasts UK Q3 GDP grow

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 stabilising labour 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.