After fully adjusting our economic forecasts to take account of what is shaping up to be a big fiscal expansion, we now think the Bank of England will raise interest rates from 1.75% currently to a peak of 4.00% next year (our previous forecast was 3.00%) before starting to cut rates in the first half of 2024. In comparison, the financial markets are currently pricing in rates rising to a peak of around 4.50% and the latest available consensus of other analysts is for rates to reach a high of 2.50%.
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