The Bank of England is set to raise interest rates for a 13th time in a row on Thursday, a day after inflation data came in higher than expected again, with investors split on just how big the new hike will be. | Reuters
“I think it’s a very finely balanced decision,” said Tomasz Wieladek, chief European economist at U.S investment firm T. Rowe Price, who predicts at least three of the Monetary Policy Committee’s nine members will vote for a half-point hike., which has been hit by the shock of Brexit as well as the COVID-19 pandemic and the surge in gas prices caused by Russia’s invasion of Ukraine, has dodged a widely expected recession so far in 2023 though growth looks set to be a minimal 0.
“The UK has a uniquely bad inflation problem,” Krishna Guha, a vice chairman at U.S. investment banking advisory firm Evercore, said.Prime Minister Rishi Sunak – who has pledged to halve inflation this year in an attempt to win back voter support ahead of a national election expected in 2024 – has said he fully backs the BoE’s efforts to tame prices.
Wieladek, who worked at the BoE from 2008 to 2015, said wages looked set to keep on growing at an annual rate of around 6 percent, almost twice the level consistent with 2 percent inflation, given the shortage of workers available to many employers.
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