Geopolitical tensions in the Middle East have kept energy prices elevated and volatile, pushing the Bank of England’s inflation forecast higher to 3.2% by late 2026 from June’s 2.6% print. This has sustained upside risks to the 2% target and prompted three MPC members to vote for a 25-basis-point hike to 4% at the July meeting, where rates were held at 3.75% by a 6-3 majority. A loosening labor market, with unemployment at 4.9%, and subdued underlying growth have tempered the consensus for immediate tightening. The September 17 decision and subsequent data releases on CPI and wages remain key catalysts that could shift the market-implied 58% probability of a 2026 hike.