Bank of England Expected to Hike Rates Again as Inflation Stays Elevated

The Bank of England is poised to hike interest rates again later Thursday, following higher-than-anticipated inflation figures.

Last week, Reuters polled economists predicted that the U.K. central bank would hike interest rates to 4.75%, the highest level since 2008.

However, after inflation remained at 8.7% in May, investors priced in a 45% chance that the central bank would choose to go for a larger move and raise rates by 0.5%, despite mounting concerns about the impact on mortgage-holders and the threat of an economic downturn.

The BoE forecasts 0.25% growth this year for Britain’s economy, which has been hit by Brexit, the COVID-19 pandemic, and Russia’s invasion of Ukraine.

In addition, markets anticipated that the BoE would continue rising rates until it reached 6%, the highest level since 2001, more than the U.S. Federal Reserve and the European Central Bank