Economists at Bank of America are now predicting another rate hike from the UK’s central bank in June, after policy makers warned on Thursday of persistent food inflation.
(Bloomberg) — Economists at Bank of America are now predicting another rate hike from the UK’s central bank in June, after policy makers warned on Thursday of persistent food inflation.
Robert Wood, chief UK economist at BofA, said the change of call came after the BOE published more “hawkish-than-expected forecasts” in its Monetary Policy Report on Thursday. BofA had previously expected no more rate hikes after May.
But after the BOE raised rates again on Thursday, Wood said he was anticipating a further 25 basis-point rise for June, taking the terminal rate to 4.75%. He added that he had “low conviction” on this timing and level, since the BOE “left all options open.”
“Big picture, however, in our view, the UK has probably the biggest persistent inflation problem among developed market economies,” he said. “The UK has experienced the greatest acceleration in wage growth and the strongest evidence, in our view, of inflation expectations de-anchoring modestly to the upside.”
Read more:
- BOE Chief Economist Says UK Inflation Is at a ‘Turning Point’
- BOE Says 1.3 Million UK Borrowers Brace for Higher Mortgages (1)
- UK Cost-of-Living Crisis Fades With Outlook for Higher Incomes
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