Soaring oil prices may intensify the Bank of England's rate hike debate before the end of the year

According to the Financial Times, soaring oil prices will prompt the Bank of England to reopen the debate on whether it needs to raise interest rates before the end of the year. Policymakers are preparing to meet later this week. The Monetary Policy Committee will convene to discuss the key interest rate and the pace of reducing the balance sheet. Meanwhile, bond market sell-offs are putting increasing pressure on Prime Minister Andy Burnham's government, with the budget scheduled to be released on October 28. Market pricing shows that the probability of a rate hike at Thursday’s September policy meeting is less than one-third. However, the renewed escalation of the war in the Middle East, rising energy prices, accelerating inflation, and relatively robust UK GDP growth are set to intensify the debate within the Bank of England over how long the key interest rate can be maintained at 3.75%. Deutsche Bank economist Sanjay Raja said, "The Bank of England's patience may be wearing thin, and the reasons for holding steady are slowly weakening."