DeVere Group: Bank of England urged to hold rates as inflation spikes

22 april 2026

The Bank of England is being urged to keep UK interest rates on hold this month as UK inflation jumped to 3.3% in March as the Iran war sparked a sharp increase in fuel prices.

The CEO of deVere Group, one of the world’s largest independent financial advisory and asset management organizations, Nigel Green, is responding to the latest inflation figures released Wednesday, which confirm the rate accelerated to 3.3%, up from 3% in the 12 months to February.

The data marks the first clear evidence of the Iran conflict feeding directly into UK consumer prices, primarily through energy and fuel costs. 'Policymakers are facing a complex inflation picture, but the right response is restraint,' says the deVere CEO.

'This surge is externally driven, concentrated in energy markets, and tightening policy into it risks compounding economic fragility rather than solving the problem.' Fuel prices have led the jump, with diesel nearing £2 per litre in parts of the UK at the end of March, reflecting a rapid escalation in global oil benchmarks following the outbreak of conflict in late February.

Brent crude has traded with elevated volatility in recent weeks, briefly pushing above $100 per barrel as supply risks intensified across the Middle East. 'Energy shocks of this nature move fast and hit hard,' notes Nigel Green.

'The UK’s reliance on imported energy leaves it exposed. Consumers feel it at the pump immediately, and businesses face higher input costs within weeks. Monetary policy cannot counteract geopolitical supply disruption.'

Additional upward pressure has come from rising food prices and seasonal travel costs, with airfares also contributing to the headline increase. Producer price data points to further pipeline inflation, with both raw materials and factory gate prices climbing on the back of higher oil-linked inputs.

'Inflation is being pushed by factors outside domestic demand,' says Nigel Green. 'Raising rates into this environment would risk choking already softening activity. Growth is weakening, confidence remains fragile, and households are under sustained pressure.'

Market expectations for interest rate cuts earlier in the year have shifted sharply. Prior to the escalation in the Middle East, inflation had been trending toward the Bank of England’s 2% target, opening the door for gradual easing. That trajectory has now been interrupted.

'The narrative has changed, but the fundamentals haven’t disappeared,' the CEO explains. 'Underlying demand in the UK economy is subdued. Wage growth is moderating, and business investment remains cautious. Those dynamics will exert downward pressure on inflation over time.'

The next Bank of England Monetary Policy Committee meeting is scheduled for April 30, where officials will assess whether to hold, cut, or raise rates in response to the evolving outlook.

'April’s decision is finely balanced, but holding steady is the most credible path,' argues Nigel Green. 'A rate hike would send a signal that policymakers are reacting to headline volatility rather than assessing the broader economic trend.'

Economists increasingly warn that premature tightening could heighten the risk of stagnation, as higher borrowing costs weigh further on consumption and investment. At the same time, expectations are building that inflation could rise again in the coming months if energy prices remain elevated, with some forecasts pointing toward a move above 4% by the autumn.

'Short-term inflation may climb further if energy markets stay disrupted. Financial markets are already reflecting uncertainty. Gilt yields have fluctuated as traders reassess the rate path, while sterling has shown sensitivity to both inflation data and geopolitical developments. Clarity from the Bank of England will be critical. Holding rates steady provides that clarity and avoids unnecessary volatility.'

A fragile ceasefire between the United States and Iran has offered limited relief, though the outlook remains uncertain as diplomatic efforts stall. Energy markets continue to price in risk, leaving inflation exposed to further shocks.

He concludes: 'These figures will concern policymakers, but they shouldn't provoke an overreaction. The UK economy is already slowing, and that will naturally dampen inflationary pressures ahead. Holding rates this month allows time for those forces to take effect without adding further strain.'