Further tightening could well see the BoE raising the policy rate by 50 bps at its meeting later in the week, suggests Economist at UOB Group Lee Sue Ann.

Key Quotes

“With the worsening in the cost-of-living crisis, we see room for only a further 50bps increase in the Bank Rate to 2.25%, before a pause thereafter.”

“That said, we bear in mind that the BoE has warned that ‘policy is not on a pre-set path’, as it projects a UK recession will begin in the fourth quarter and last all the way through next year”.

“It also boosted its forecast for the peak of inflation to 13.3% in Oct amid a surge in gas prices, and warned that price gains will remain elevated.”