Middle East conflict to raise UK inflation more than it cuts growth
We will wait for more clarity on events in the Middle East before altering our inflation, GDP and Bank Rate forecasts. But in a scenario in which oil and gas prices remain close to current levels until May, we would probably raise our 2026 CPI inflation forecast from 2.1% to 2.4%, nudge down our 2026 GDP growth forecast from 1.0% to 0.8% and raise our end-2026 Bank Rate forecast from 3.00% to 3.25%.
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