Interest Rate | Traders Reduce Bets on the Bank of England's April Rate Hike

SighingCashier · 2026-03-30T17:31:06+00:00

Traders have reduced their bets on the Bank of England raising interest rates, with the probability dropping to 45%, the first time below 50% since March. The Middle East conflict has sparked concerns about economic growth, with business leaders calling on the central bank to halt rate hikes to prevent further damage to the economy. Inflation has already exceeded the target, with major financial institutions forecasting it could reach as high as 5%.

SighingCashier

2026-03-30 17:31:06

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Traders have pared back bets on further rate hikes by the Bank of England; the probability now stands at 45% for a rate increase next month for the Bank of England.

Earlier this month, the market had fully priced in the prediction of a 0.25 percentage-point rate hike next month by the Bank of England.

Traders are watching as the Middle East war, if it drags on, could put pressure on economic growth and thereby reduce the outlook for the need for monetary tightening.

As the Middle East conflict continues, leaders from the UK business community and union chiefs are urging the Bank of England not to raise rates, warning that further hikes by the Bank of England would inflict even greater damage on an economy that is already stretched thin. At the same time, the ongoing Middle East conflict casts a shadow over the UK’s economic outlook, intensifying fears of rising inflation and a slowdown in economic growth.

Recent official data show that inflation is already well above the Bank of England’s 2% target, reaching 3% in February, highlighting the urgency of the warnings issued by business leaders.

The threat of accelerating inflation is plain to see. Major financial institutions, including US bank Goldman Sachs, have warned that UK inflation could be as high as 5%. This expectation has prompted traders to bet that the Bank of England will raise rates as many as four times in 2026, which is sharply at odds with earlier expectations for rate cuts.

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