Bank of England set to overshadow Healey’s Budget with interest rate hike

The Bank of England is expected to overshadow John Healey’s maiden Budget with a “done deal” interest rate hike aimed at taming soaring inflation, but this threatens to limit economic growth. Top City economists predict the central bank’s Monetary Policy Committee (MPC) will raise the base rate at its November meeting, just one week after the Autumn Budget. The Bank has left rates unchanged at 3.75 per cent since its last 25 basis point cut at the end of 2025. But hawks on the committee have called for rates to increase in response to the energy crisis triggered by the ongoing US-Iran conflict. Following a blowout inflation print on Wednesday, all barriers to a rate hike are expected to be removed. Thomas Pugh, chief economist at RSM, said the inflation news, coming after stronger economic growth and a lower unemployment rate, “almost guarantees an interest rate hike next month”.  “With inflation likely to significantly exceed four per cent in the new year, a second rat