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
last week were unanimous that the BoE would raise rates to 4.75%, their highest since 2008, from 4.5%.held at 8.7% in May, financial markets priced in a nearly 50% chance that the BoE would opt for a bigger move and raise rates by half a percentage point.
Unlike most other big rich economies, output has barely recovered to pre-pandemic levels. However, two inflation readings since the BoE's last rate hike in May have both been higher than expected, raising fears that Britain faces a more persistent price growth problem than the United States or the euro zone.
"The UK has a uniquely bad inflation problem," Krishna Guha, a vice chairman at U.S. investment banking advisory firm Evercore, said. 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%, almost twice the level consistent with 2% inflation, given the shortage of workers available to many employers.
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