Bank of England Expected to Raise Bank Rate to 5.00% Amid High Inflation

The Bank of England is expected to raise its Bank Rate to 5.00% next quarter due to high inflation, which is currently at a joint-highest rate among G7 advanced economies.

The inflation rate rose to 8.7% in annual terms last month, and a closely-watched measure of core price rises surged to a 31-year high.

The bank is expected to take further action and raise interest rates in August and September, with Bank Rate peaking at 5.00% by the end of Q3.

The BoE is seen ending the year at 4.00%.

A majority of economists surveyed believe the peak rate will be higher than their forecast.

The bank needs to address the risk of high inflation being sticky, and may need to raise interest rates further.

The BoE has made 12 consecutive interest rate increases since December 2021, adding 4.4 percentage points in the sharpest increase in rates since 1989.