Ahead of the Bank of England’s interest rate decision on Thursday, Charlie Ambler, Co-Chief Investment Officer, Partner at Saltus, has shared his thoughts.
“As the conflict in the Middle East continues to escalate, increased oil prices are poised to push up the headline rate of inflation to near double the Bank of England’s 2% target. This is a direct threat to the Bank’s slow and steady rate cutting cycle, with markets now increasingly pricing in a change of course.
“The consensus is that rates will be held at 3.75% this week, with hikes later this year now being priced in by the market. However, this depends entirely on how long the conflict goes on and oil prices remain elevated. While markets will be looking for reassurance amid this uncertain backdrop, any forward guidance will likely remain cautious.
“The risk of renewed pressure later in 2026 is now front of mind for investors. With both the FTSE 100 and S&P 500 falling sharply over recent days, bond yields rising and ongoing gold price volatility, geopolitics continues to shape asset allocation decisions. However, as long term returns are driven by maintaining diversified exposure to quality assets, the focus should remain firmly on quality and resilience, underpinned by a disciplined approach portfolio construction.”
