More geopolitics, more inflation and more rate moves

In this week’s episode of Bondcast, Head of Economics and Markets Strategy Imogen Bachra shares edited highlights from NatWest’s recent client webinar focused on the intersection of geopolitics, economic sentiment and market implications. Joined by Scott Livingstone (NatWest’s International Advisor) and Ross Walker (Global Head of Economics) the discussion covers the ongoing Middle East conflict, its economic impact, and how markets and policymakers may respond.

Key discussion points:

- Current phase of the Middle East conflict and the shift to “Plan B”.

- Three potential US strategies: rapid declaration of victory, compelling Iran to a deal, or a prolonged campaign of military pressure.

- Key indicators to watch: US force positioning, US-Israel alignment, and the actions of regional actors like the Houthis

- Updated growth forecasts and inflation expectations

- Bank of England likely to lean towards modest rate hikes in the second half of the year; limited scope for early cuts.

- Markets are pricing in potential rate hikes, but the timing may be later than current expectations.

- UK gilt markets remain sensitive to fiscal credibility and geopolitical developments.

This episode was recorded on 31 March 2026.

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