All 65 economists polled see no change, but nearly 40% flag growing risk of a rise this year
Every economist surveyed in a Reuters poll published on 12 June expects the Bank of England (BoE) to leave Bank Rate at 3.75% at its upcoming Monetary Policy Committee meeting on 18 June — but a significant minority are now pricing in a hike before the year is out.
Of the 65 economists polled between 5 and 12 June, all predicted no movement at the June meeting, with median forecasts pointing to an unchanged rate for the remainder of 2026. Yet nearly 40% of respondents forecast at least one hike, while only six anticipated a 25-basis-point cut by year-end.
For mortgage brokers navigating client conversations ahead of the decision, the picture is one of surface stability masking genuine underlying pressure.
Energy shock and inflation risk
The hawkish minority view is being driven primarily by inflation dynamics tied to the ongoing conflict in the Middle East. Governor Andrew Bailey said earlier this month that it was important to get inflation back to the 2% target and to give households confidence in the central bank's ability to do so. Fellow Monetary Policy Committee member Megan Greene last week said she saw a growing case for raising interest rates as the Iran war drags on and raises the prospect of wider-ranging price increases across the economy.
British inflation is forecast to peak at 3.6% towards the end of the year — close to double the BoE's 2% target — and is projected to average 3.3% across 2026 before easing to 2.6% in 2027.
Those dynamics sit uncomfortably alongside what had, until recently, been a more optimistic rate trajectory. As Mortgage Introducer has reported, brokers have been reporting stronger pipelines and early signs of more competitive lender pricing since the last hold — a trend that a hike scenario could quickly reverse.
Growth revised up, but April contracts
The broader economic picture is mixed. The poll revised up the UK growth forecast for 2026 to 1.0%, from the 0.8% projection in the May survey, with growth of 1.1% expected in 2027 and 1.5% in 2028. The Organisation for Economic Co-operation and Development (OECD) also nudged its forecast higher this month, lifting its 2026 projection for Britain to 0.9% from the 0.7% it had predicted shortly after the Middle East conflict erupted.
Yet that headline improvement is partly a function of a strong start to the year. The UK economy contracted 0.1% in April — its first monthly drop since August — according to official data released on 12 June.
Services firms, meanwhile, saw a small fall in activity in May as the Iran war pushed up costs sharply, according to a key survey — a sector that brokers and their clients depend on for employment confidence and borrowing capacity.
Oil prices and a possible turning point
Hopes of a resolution to the Iran war grew on 12 June after US President Donald Trump said a deal with Iran could be signed as soon as that weekend. Any de-escalation that eases energy prices would significantly alter the calculus for the committee in the months ahead and could shift broker conversations back towards the prospect of eventual cuts.
For now, the June decision looks settled. What the MPC signals about its forward thinking — and how markets respond to any developments in the Middle East — may prove more consequential for the UK mortgage rate outlook for the second half of 2026 than the rate decision itself.
Brokers watching swap rates should note that the balance of risks has shifted materially. Whether that shift translates into repricing will depend as much on geopolitical developments over the coming weeks as on anything the Bank of England says on 18 June. Further coverage of the latest UK mortgage market news and rate developments is available on Mortgage Introducer.
