Escalating energy price volatility from the Middle East conflict has driven the 84.5% market-implied probability of a Bank of England rate hike in 2026 by pushing inflation higher and tilting risks to the upside. The MPC held Bank Rate at 3.75% in its September 17 meeting by a 6-3 vote, with three members favoring a 25-basis-point increase to 4%, citing August CPI at 3.1% and projections for inflation reaching around 3.75% in 2026 Q4 and slightly above 4% in early 2027. Hawkish communications from members including Huw Pill and Catherine Mann highlight concerns over second-round effects, while the November 5 meeting remains the key near-term catalyst amid ongoing geopolitical uncertainty. Traders view the skin-in-the-game consensus as reflecting these sustained inflationary pressures relative to the 2% target.