Deutsche Bank: Rising inflation in the UK may end this year's discussions about the Bank of England cutting interest rates

K-LinePoet · 2026-04-03T00:52:21+00:00

Sanjay Raja of Deutsche Bank pointed out that due to soaring energy prices, the Bank of England's 2% inflation target is difficult to achieve. He expects the possibility of interest rate cuts this year to disappear and warns that the risk of rate hikes is increasing. He forecasts that inflation will reach around 3.5% later this year.

K-LinePoet

2026-04-03 00:52:21

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Deutsche Bank’s Sanjay Raja said in a report that, given the surge in energy prices, a return to the Bank of England’s 2% inflation target currently looks a distant prospect. Raja said, “The resurgence of inflation will quash any talk of rate cuts this year. And the risk that the Bank of England reverses course and raises its benchmark interest rate can no longer be ignored.” He said that retail fuel prices have risen nearly 7% in March, and April may see a similar increase. The likelihood that inflation will spill over into other parts of the consumer price index (CPI) basket is rising: fertilizer prices are increasing, transportation costs are spiking, and the outlook for second-round effects cannot be ignored either. He said inflation is expected to peak around 3.5% later this year. (Sina Finance)

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