The Bank of England projects inflation to rise by approximately 0.5 percentage points in H2 2026, reaching 3.3% by Q3 and potentially higher by Q4, up from 2.6% in June 2026. The inflation surge is primarily driven by energy price spikes linked to the Gulf conflict involving Iran, threatening to derail the return to the central bank’s 2% target. The Bank holds its benchmark rate steady at 3.75%, its lowest since February 2023, but believes existing labor market slack provides enough room to avoid a wage-price spiral. For cryptocurrencies and risk assets, this means persistently elevated rates, increasing the opportunity cost of holding non-yielding assets like Bitcoin while making financing more expensive for crypto-adjacent companies and reducing venture capital flows to blockchain startups.
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