Bank of England faces inflation crossroads.

Bank of England faces inflation crossroads. Policymakers preparing for March 19 interest-rate decision must decide whether to tolerate energy-price shocks threatening inflation targets. Recent geopolitical tensions have disrupted energy markets significantly, with Brent crude surging over 27% last week. Markets now price in only a 50-50 chance of rate cuts this year, a dramatic shift from earlier expectations of one or two cuts from the current 3.75% level. The National Institute of Economic and Social Research warns rates may need to rise above 4% if energy shocks persist. Inflation could reach 3.5% later this year instead of hitting the 2% target as previously expected. This represents a major setback for Chancellor Rachel Reeves, who had planned on lower borrowing costs to stimulate economic growth and reduce debt servicing expenses.