Not long ago, many analysts believed borrowing costs would finally begin falling this year after years of inflation pressure. But the worsening tensions in the Middle East have suddenly changed those expectations. Central banks now fear the conflict could trigger another major inflation wave, especially if oil prices continue climbing.
Although the Bank of England decided to keep interest rates unchanged for now, officials strongly hinted that future increases are becoming more likely if the situation deteriorates further. Behind closed doors, policymakers reportedly examined several possible crisis scenarios — including one where oil prices surge above $120 a barrel and inflation climbs beyond 6%.
Under the worst-case projections, Britain could face as many as six additional interest-rate hikes, potentially pushing the base rate to 5.5%.
For millions of families already struggling with the cost of living, that could have devastating consequences.
Mortgage holders are expected to be among the hardest hit.
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