Morgan Stanley Expects Two Quarterly Rate Hikes from Bank of England

11:52 AM EDT, 09/25/2026 (MT Newswires) -- Morgan Stanley Research now expects the Bank of England to increase its key rate by 25 basis points in November 2026 and February 2027, with the possibility of more monetary policy tightening thereafter. "We expect a slowdown in growth at the turn of the year but, given the robustness of global growth, see balanced near-term risks ... While we still think - and with a decent degree of conviction - that any signs of an improvement in the supply in oil and refined products would leave the BoE on hold from here, it is challenging to maintain a prolonged hold as a modal call amid the recent Middle East newsflow," the research firm said in a Friday note. "The UK economy has enough slack, we think, to digest the ongoing external shock without generating second-round effects that require a meaningful monetary response." The research firm previously expected the BoE to not raise its bank rate in the near future. Analysts also noted that it views commodity prices, the UK's regulatory and fiscal policy as key catalysts for further hikes.