Iran Conflict Halts Bank of England’s Interest Rate Cut Expectations

Key Facts

1The Bank of England was widely expected to cut interest rates in March or April 2026.

2Economists suggest that the outbreak of war in Iran has halted the expected monetary easing plans.

Economists suggest that the outbreak of war in Iran has effectively halted the Bank of England’s (BoE) anticipated plans for monetary easing. Previously, markets widely expected the central bank to begin cutting interest rates in either March or April 2026. However, the escalating geopolitical conflict has forced a significant revision of these forecasts as global risks and potential energy price shocks intensify. Analysts warn that such instability could trigger renewed inflationary pressures, making central bank officials hesitant to lower rates in the near term. Consequently, the prospect of higher-for-longer interest rates is providing hawkish support for the British Pound against major currency pairs. This shift highlights the growing impact of geopolitical volatility on global monetary policy trajectories.