Escalation in the Middle East conflict has driven sharp rises in energy prices, pushing UK CPI inflation to 3.3% and shifting Bank of England expectations away from earlier anticipated cuts toward potential tightening in 2026. At its April 30 meeting, the MPC held Bank Rate steady at 3.75% by an 8-1 vote, with one member favoring a 25 basis point increase amid upside risks to wages and second-round effects. Money markets now price in roughly 62 basis points of rate hikes by year-end, reflecting the central bank’s state-contingent stance and scenario-based forecasts that could require materially higher policy rates. Traders assign a 70% implied probability to at least one hike occurring this year, with the June 18 MPC decision and upcoming April CPI release as key near-term catalysts.