Bank of England Preview: Vigilance

We expect the MPC to leave Bank Rate unchanged at 3.75% in April and to restate its vigilant stance. Even with the Strait of Hormuz closed, energy prices have been slightly lower than expected. A lower inflation peak would reduce the risk of inflation becoming entrenched, despite PMI evidence of emerging supply‑side pressures. Initial conditions remain unfavourable to persistence: demand is much weaker than in 2022 and macroeconomic policy is already restrictive. We still expect one further rate hike, but see a high bar to a renewed hiking cycle.