Bank of England does not need to hike interest rates, says IMF ŌĆö it may even need to cut

Commuters crossing a junction near the Bank of England (BOE), left, in the City of London, UK, on Wednesday, May 8, 2024. Bank of England policymakers appear the most divided since they brought their hiking cycle to a close last year, illustrating the challenge that Governor Andrew Bailey faces in steering his colleagues toward possible interest-rate cuts in the coming weeks. Photographer: Hollie Adams/Bloomberg via Bloomberg | Bloomberg | Renewed inflationary pressures in the U.K. since the outbreak of the Iran war have upended monetary policy expectations, with the Bank of England forecast to hold, if not hike, interest rates this year. But the International Monetary Fund — which on Monday upgraded the U.K.'s growth forecast for 2026 — suggested that the central bank should be ready to cut interest rates, if necessary. "Monetary policy should remain restrictive to ensure that higher energy prices do not spill over to core inflation and wage growth," the IMF said in its latest forecast for the U.K. "The rise in energy prices will lift headline inflation this year while also weighing on output, complicating policy calibration," it added. …