The further tightening in the labour market, the additional loosening in fiscal policy and more evidence that the weaker activity outlook is not reducing price and wage expectations lead us to believe that the Bank of England will raise interest rates by 50 basis points (bps), from 1.00% to 1.50%, at the policy meeting on Thursday 16th June. Even if we’re wrong (it is a very close call) and the Bank sticks to a 25bps hike, recent developments support our view that rates will rise to a peak of 3.00% next year. Clients can question our thinking during our live Drop In webinar on Tuesday 14th June at 3pm BST. (Register here.)
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