Middle East conflict may push up UK prices in 2026, potentially forcing the rate cut window to close

Golden Ten Data reported on March 6 that Edward Allenby from Oxford Economics stated in a report that the Middle East war is expected to increase the UK's inflation rate by 0.4 percentage points in 2026. He pointed out that the rise in crude oil prices caused by the conflict will be transmitted to gasoline prices, thereby pushing up inflation. Allenby believes that the risk of rising inflation reduces the likelihood of the Bank of England cutting interest rates in March. He stated: "If the conflict is brief and energy prices quickly fall back, the Monetary Policy Committee may resume rate cuts in April or June." According to data from LSEG, the market has lowered its expectations for rate cuts by the Bank of England this year, with the probability of a rate cut in 2026 currently priced at only 41%.