Bank of England does not need to hike interest rates, says IMF — it may even need to cut
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- IMF upgraded its 2026 UK GDP growth forecast to 1% from 0.8%.
- Bank of England is advised to keep its Bank Rate at 3.75% for the rest of the year to maintain a restrictive stance.
- Bank of England should retain flexibility to cut rates if second‑round inflation effects prove stronger than anticipated.
- Energy prices are expected to lift headline inflation this year, delaying the return to the 2% target until around end‑2027.
- United Kingdom economy grew 0.6% in Q1, beating expectations and showing resilience despite the Middle‑East war shock.
Why it matters: UK businesses and borrowers see stable financing costs as the BOE holds rates at 3.75%, while the IMF’s call for flexibility to cut rates offers a safety net if inflation pressures rise, shaping mortgage rates and fiscal planning through 2027.
