War won’t derail the MPC’s rate hiking plans

The economic consequences of the war in Ukraine have worsened the already tricky mix between soaring inflation and slowing GDP growth. But we think the Monetary Policy Committee (MPC) is sufficiently worried that higher inflation is feeding into price and wage expectations to raise Bank Rate from 0.50% to 0.75% on Thursday 17^th March. What’s more, a tight labour market may well mean the MPC eventually raises rates to 2.00% next year.