Goldman Sachs adds a February 2027 Bank of England increase to its forecast, ahead of Thursday’s expected move to 4%
The bank cites higher energy prices and strong data, while the central bank itself may push back on market bets for more.
Goldman Sachs said it now expects the Bank of England to raise interest rates by 25 basis points in February 2027, in addition to the increase it already forecasts for this week1,2. The bank cited higher energy prices and strong economic data for the change2.
The Bank of England is expected to lift Bank Rate to 4.0% from 3.75% on Thursday as energy costs push up inflation8. Economists polled ahead of the meeting point to that outcome8, and the Bank looks set to raise rates in a push to quell inflation5.
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Why it matters to investors
Goldman’s call extends the tightening cycle beyond a single move. Thursday’s increase is widely expected, so the debate is shifting to how many follow1,8.
The central bank may resist that debate. The Bank of England is poised to raise rates but may push back on bets for more3. Its hand has been described as “increasingly forced” by the inflation backdrop4.
The global setting is different from the last tightening cycle. Then, the Bank of England was among the first major central banks to raise rates; this time the US Federal Reserve and the European Central Bank have moved first3,4. The Bank is expected to join its peers on Thursday, with the Fed, the ECB and the Bank of Japan each having raised rates at least once since the start of the US-Iran war7.
There is also a structural argument. The Bank of England is reassessing its stance because of surging investment and strong UK growth, which may require tighter policy than before6.
For households, the increase lands on top of high energy bills. British households stung by energy prices face a fresh squeeze from the expected rise5.
Currency markets are already positioned. The pound rose above $1.34, its highest level since mid-September, as investors prepared for the decision9.
What to watch
Thursday’s decision itself is the first test: a move to 4.0% is the expected outcome7,8.
The more important signal will be the guidance. Any pushback from the Bank against further increases would cut against Goldman’s new February 2027 forecast1,3. Guidance that leaves the door open would support it.
Investors will also watch energy prices, which Goldman cites for its new forecast and which economists see driving the inflation the Bank is responding to2,8.
Sources
- Goldman Sachs sees BoE raising rate in February 2027 - Reuters, reuters.com (2026-11-02)
- Goldman Sachs Sees Bank of England Rate Hike in February 2027, globalbankingandfinance.com (2026-11-02)
- Bank of England poised to raise rates but may push back on bets for more | Reuters, reuters.com (2026-11-02)
- Bank of England poised to raise rates but may push back on bets for more | live, live.euronext.com (2026-11-02)
- Bank of England set to raise rates to 4% in push to quell inflation - Financial Times, ft.com (2026-11-02)
- The Bank of England Ponders a New Normal for Interest Rates - Bloomberg, bloomberg.com (2026-11-02)
- BOE Expected to Join Peers in Raising Key Rate, wsj.com (2026-11-02)
- Bank of England Expected to Raise Rates to 4.0% as Energy Costs Drive Inflation, indexbox.io (2026-11-02)
- Sterling Rises Ahead of BoE Rate Decision - Trading Economics, tradingeconomics.com (2026-11-02)
Assembled by Edwin, my AI assistant powered by Claude, from the public excerpts of the outlets numbered above. No human wrote or checked it before publication, so read the sources before you act on it.
This story passed the checks every published story must pass: 9 sources from 8 outlets, at least two outlets, at least five citations to its sources, a Tier 1 or 2 source cited, every substantive figure found in a cited source, no repeat of a recent headline.