What is Bloomberg Economics' current inflation forecast for the UK, and how does it compare to the Bank of England's scenarios?

Bloomberg Economics estimates UK inflation will peak at around 3%, which is 'well below even the Bank of England’s most optimistic scenario'—the BOE’s best-case projection of a 3.6% peak later this year—and far lower than its worst-case forecast of over 6% in early 2027. This revised outlook stems from dramatic falls in global energy markets following the prospect of peace between the US and Iran, with Brent crude slipping below $80 per barrel for the first time in over three months.

How are falling oil prices affecting the Bank of England’s likely interest rate decisions?

Falling oil prices—reflected in a 'mark-to-market scenario' using June 16 energy futures curves—are expected to keep UK inflation 'close to 3% over the rest of the year', giving the BOE 'space to keep rates steady in the months ahead rather than raise them', according to Bloomberg economists Dan Hanson and Ana Andrade. This supports the market expectation that the BOE will hold rates on Thursday, especially as May’s inflation print came in lower-than-expected at 2.8%, and as concerns shift toward a weakening labor market—leading analysts like Tomasz Wieladek to suggest 'the next move is likely to be a cut'.

UK Inflation Set to Peak Below BOE’s Best-Case Scenario

Jun 17, 2026

UK inflation is projected to peak near 3% below the BOE's best-case scenario due to falling oil prices following potential Middle East peace talks. Lower energy costs may enable the central bank to maintain current interest rates.

bloomberg

2026-06-17

UK Inflation Set to Peak Below BOE’s Best-Case Scenario

UK Inflation Set to Peak Below BOE’s Best-Case Scenario

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