The escalation of Middle East conflict has elevated energy prices and pushed March 2026 CPI inflation to 3.3 percent, prompting the Bank of England to hold Bank Rate steady at 3.75 percent in its April decision by an 8-1 vote while signaling readiness for tightening if second-round effects emerge in wages and prices. This shift has reversed earlier expectations of cuts, with futures markets now pricing in as many as three 25-basis-point hikes later in the year amid upside risks to inflation averaging above 3 percent in the second half. Traders on Polymarket assign the 79.5 percent implied probability to a rate hike in 2026 largely because of these persistent supply shocks and the MPC’s state-contingent stance, though a softening labor market and subdued growth provide some counterbalance ahead of the June 18 meeting and subsequent data releases.