Barclays chief economist Jack Meaning has predicted that the Bank of England will raise interest rates as soon as November, but believes the market's expectation of four increases over the next year is too severe.
Appearing on the Martin Lewis BBC podcast, which aired on September 24, Mr Meaning said the next increase will likely come in November. He attributed the expected move to geopolitical factors, noting: "It's looking very likely now, given what's happening in the Middle East, that interest rates will change, that they will ultimately have to go up. And I think probably the most likely place we'll see the next increase will be as soon as November."
Market expectations vs. Barclays view
The base rate currently stands at 3.75 per cent, where it has been since January 2026. It was previously cut steadily from a peak of 5.25 per cent, with the first reduction in August 2024.
Mr Meaning said the Bank of England has signalled it will likely raise rates, and many market analysts predict a rise. However, he differs from the market on the scale of increases. He said: "Where my personal view would differ from the market, the market thinks that's going to be the first in a sequence of interest rate increases. So if I look at pricing on my computer screen this morning, it tells me that the market expects four 25-basis point increases, so a whole percentage point more on short-term interest rates."
He added: "I think we'll maybe see one quarter-point increase, probably if the Middle East continues through the end of the year, a second one early next year, but the market is running far ahead of that."
Impact on inflation and energy bills
Martin Lewis asked whether this was a conservative estimate given energy bills are set to rise significantly in January. Previous estimates suggested the Ofgem price cap could rise 24 per cent, with more recent predictions lower at 22 per cent or 15 per cent. Mr Lewis said the actual increase will very likely be within the 15 to 30 per cent range.
The economist defended his position, saying much of the impact of higher oil and gas prices is already priced in: "That will feed through in terms of pump prices very quickly, but then ultimately, it will fade out of those inflation numbers also quite quickly. So, there's nothing the Bank of England can do to change that."
He said he is "relatively confident" it will be one or two rate increases rather than four, citing domestic factors: "Unemployment is starting to tick up, wage growth is relatively muted, and growth is ticking along, but could also still be going further towards its potential."
What it means for savers and borrowers
Mr Meaning explained the effect of a base rate change on different groups. He said: "It tends to be if interest rates go up, then asset prices drop. So, if you're an asset holder, you're losing out. It tends to be if you're a saver, then you gain."
He noted that most people fall into both camps, so a rise means better savings rates but higher mortgage costs. He said: "The kind of the impact that actually comes to you personally is a combination of those different effects. But, yeah, if you're a borrower, this is going to be more painful, and if you're a saver, you're going to benefit from this."
