BofA Forecasts Two BOE Rate Hikes by February 2027
Bank of America Global Research now expects the Bank of England (BOE) to raise interest rates by 25 basis points in November 2026 and February 2027, potentially lifting the policy rate from 3.75% to 4.25%. The BOE rate hikes forecast aligns with projections from J.P. Morgan, Barclays and UBS.
Markets are pricing in a 63% probability of a November 2026 BOE rate hike, according to LSEG data. The shift follows BofA’s June forecast, which called for rates to remain at 3.75% throughout 2026 after UK inflation eased to 2.8% in May.
Renewed concerns about inflation, including the risk of price growth exceeding 4% in early 2027, have prompted major banks to revise their outlooks. Middle East tensions and potential energy-price shocks have added to the uncertainty. BofA described the November hike as a close call and said any tightening would likely be precautionary rather than the start of a prolonged hiking cycle.
For traders, the BOE rate hikes forecast could support sterling and keep gilt yields elevated, although much of the November move may already be reflected in prices. The February hike remains dependent on incoming inflation, growth and global-market data.
Neutral
The market impact is neutral because the article concerns an analyst forecast rather than a confirmed BOE policy decision. A path of two 25-basis-point rate hikes would generally support sterling and raise UK bond yields, while tightening global financial conditions can reduce demand for risk assets, including cryptocurrencies. That creates a potentially bearish secondary effect for Bitcoin and other digital assets, particularly if US and European yields also rise.
In the short term, the 63% probability priced for a November hike means much of the initial reaction may already be embedded in currency and gilt markets. A stronger-than-expected UK inflation report or further energy-price shock could push yields higher and weigh on crypto sentiment. Conversely, softer inflation, weaker growth or a reduced probability of a February hike could support risk assets and trigger a relief rally.
Historically, unexpected central-bank tightening has often increased volatility across equities, foreign exchange and crypto markets, while widely anticipated moves have produced more limited reactions. Over the longer term, the key issue is whether the BOE’s forecast signals a broader global inflation resurgence. A sustained tightening cycle would be negative for crypto liquidity, but a precautionary, short-lived adjustment would likely have only a modest market effect. Traders should monitor UK CPI, energy prices, gilt yields, sterling and central-bank guidance rather than treat the forecast as a definitive trading signal.