Burnham has to sell Bank rate rises as ‘breathing space’ – good luck with that

AI desk brief

Bank of England minutes left rates unchanged at 3.75% for now, but Governor Bailey warned policy may have to tighten if Middle East conflict persists, as renewed Iran-related tensions have pushed oil back above $100/bbl and lifted UK inflation to 3.1% in August. The MPC now expects inflation above 4% in Q1 2027, while markets are already pricing higher mortgage costs and a more fragile bond backdrop.

The article frames the BoE as an outlier after the Fed’s latest hike and ECB tightening, with energy-driven inflation and geopolitics likely to keep upward pressure on yields and cost-of-living dynamics. For metals, the mix is supportive on the inflation/geo shock channel but partially offset by the prospect of higher rates.