Bank of England forecast to raise interest rates to 1.75% to fight inflation

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Bank of England forecast to raise interest rates to 1.75% to fight inflation

“Markets have already pared back expectations for ‘peak’ Bank Rate from 3.5 percent to 2.9 percent, though that still implies two further 50bp rate

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“Markets have already pared back expectations for ‘peak’ Bank Rate from 3.5 percent to 2.9 percent, though that still implies two further 50bp rate hikes by December, plus a little more thereafter.

“That still feels like a stretch. We’ve been pencilling in a peak for Bank Rate at two percent (1.25 percent currently), which would mean just one more 25 basis point rate hike in September before policymakers stop tightening.

“In practice, that might be an underestimate and depending on the signal the Bank sends next week, we wouldn’t rule out an additional 25, or at most 50 basis point, worth of rate hikes on top of that.”



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