The further surge in inflation coupled with the rapid tightening in the labour market will probably prompt the Monetary Policy Committee (MPC) to raise interest rates from 0.25% now to 0.50% on Thursday 3rd February and begin quantitative tightening (QT). We now expect the MPC to hike rates four times to 1.25% by the end of 2022, above the level of 0.75% expected by most economists this year.
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