Bank of England Warns of Rate Hikes as Iran Conflict Drives Inflation to 3.3%

The Bank of England is signaling potential interest rate hikes as the conflict in Iran drives up global energy costs and inflation. Oil prices near $100 a barrel and UK inflation hitting 3.3% in March 2026 are pressuring the central bank, which held rates at 3.75% but now signals readiness to act.

This stance is rippling through global markets. In the US, predictions for Fed rate cuts are declining, and the ECB interest rate market remains at 100% YES for no changes in April 2026, reflecting expectations that inflation pressures will keep rates steady or higher.

Key watchpoints include Fed Chair Jerome Powell’s upcoming statements and inflation data, ECB President Christine Lagarde’s communications, and the trajectory of the Iran conflict and energy prices.