The International Monetary Fund released news on the 11th that the Bank of England is expected to raise interest rates by another 25 basis points to 5.5%.
International Monetary Fund chief economist Gurinchas said, overall, the UK growth momentum is weak, the labor market cooling, high inflation is still persistent. That would require monetary policy to remain tight for some time, well into next year.
In response to high inflation, the Bank of England raised its key interest rate by 25 basis points to a 15-year high of 5.25 percent in early August, its 14th consecutive increase.
Recently, market expectations that the Bank of England's interest rate cycle has come to an end are growing. Mohit Kumar, chief financial economist for Europe at Jefferies, said the Bank of England is expected to continue raising interest rates, but even if it does, it could be the last hike in this tightening cycle. Goldman Sachs also recently cut its forecast for peak interest rates in this cycle by 25 basis points to 5.5 per cent.
Inflation is above the 5% target Prime Minister Sunak wants by the end of the year and above the 2% target the Bank of England wants to hit. UK inflation remains high among major developed economies. Some media analysis said that between controlling inflation and stabilizing growth, which side is the Bank of England biased, whether to further raise interest rates? It would be a tough choice for the Bank of England.