Morgan Stanley expecting BoE rate hikes in November, February.

Source: Sharecast

The bank, which had previously expected no hikes for the foreseeable future, said: "We saw the September meeting and Deputy Governor Lombardelli's remarks as quite balanced, with the MPC keen to stress that both the November hike and the path ahead are clouded with uncertainty.

"But the newsflow in the commodity markets is not improving. While we still think - and with a decent degree of conviction - that any signs of an improvement in the supply in oil and refined products would leave the BoE on hold from here, it is challenging to maintain a prolonged hold as a modal call amid the recent Middle East newsflow."

Last Thursday, the BoE held interest rates at 3.75%, as widely expected, for the sixth meeting in a row.

The Monetary Policy Committee voted by a majority of 6-3 to keep rates on hold, with the three dissenters - Megan Greene, Catherine Mann and Huw Pill - favouring a 25 basis points hike.

The Bank said the six members who voted to keep rates unchanged were concerned about recent developments in a range of energy prices and their impact on holding CPI inflation above target for longer than had been previously expected.

The three hawks in favour of a hike noted that the escalation and duration of the Middle East conflict continued to raise energy and food prices.