Bank of England Set to Raise Interest Rates for 13th Time in a Row Amid High Inflation

Investors are divided on the size of the upcoming hike, with a 45% chance of a larger move to 5%, according to Reuters polls.

The BoE is expected to raise rates to 4.75% from 4.5%, its highest since 2008.

The central bank has been grappling with high inflation, which has overshot its forecasts, and Britain's economy has barely recovered to pre-pandemic levels.

Unlike most other rich economies, output has not recovered to pre-pandemic levels.

Two inflation readings since the BoE's last rate hike in May have been higher than expected.

The central bank forecasts that consumer price inflation will fall to just over 5% by the end of this year and be below its 2% target in early 2025.

However, some economists believe that getting inflation from 5% to 2% may prove a tougher task than the initial fall.

The BoE's efforts to tame inflation have faced criticism from some members of the government, according to Sky News.

The article discusses the impact of unemployment on wage growth in the UK.

According to Wieladek, the Bank of England would need to engineer a recession to push unemployment up to 6.0%-6.5% from its current 3.8% to achieve slower wage growth.

However, most economists believe that rates are more likely to peak near 5% as recent falls in energy and raw material costs affect the price of other goods and services.

Some experts believe that market pricing for a lot more rate hikes could reverse quickly if weaker inflation is accompanied by easing wage pressures.