UK economic notes: BoE Preview: Walking The Line

Research evidence excerpt

UK economic notes: BoE Preview: Walking The Line

Deutsche Bank

Research

Europe Economics Date

United Kingdom 12 June 2026

UK economic notes

BoE Preview: Walking The Line

Sanjay Raja

After buying some time in April, the June decision will come with a similar degree

Chief UK Economist

of uncertainty. The Iran conflict has yet to resolve. Price uncertainty lingers on. And +44-20-754-50530

the MPC continues to walk a narrow path in balancing weaker-labour market

outcomes with emerging price pressures. To be sure, we expect the June decision

to err marginally on the hawkish side, with more focus turning towards the duration

of the energy shock and its implications for indirect and second-round effects. And

we think a focus on maintaining sufficient policy restraint will be at the top of the

MPC's agenda.

The decision. We expect Bank Rate to remain unchanged at 3.75% for a fourth

consecutive meeting.

The vote split. We expect a 7-2 vote tally, with Chief Economist Huw Pill and

external MPC member Megan Greene opting for a rate hike. Risks to our call are

skewed in a more hawkish direction.

The message. We expect the MPC's message to be three-fold. First, market

conditions have fared far better than many on the MPC feared. For all intents and

purposes, we remain closer to the Bank's Scenario A with regards to energy prices

(i.e. its most dovish scenario). Second, financial conditions continue to weigh on

activity and inflation, with Bank Rate expectations having risen further from the

April MPR assumptions. Third, we expect the MPC to talk up the risks of a protracted

energy shock, with a longer duration likely raising the likelihood of indirect and

second-round effects.

The forward guidance. We expect no change to the Bank's forward guidance. But