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BoE falling behind the Fed, but hints it may speed up

By raising interest rates by 25bps (basis points) today, from 1.00% to 1.25%, rather than by 50bps or the 75bps the Fed announced last night, we think the Bank of England is putting too much weight on the softening economy and not enough on surging inflation. It did hint it may yet raise rates faster. But either way, we think the Bank will have to raise rates to a peak of 3.00%. That’s a little lower than the peak of 3.50% now priced into the markets, but higher than the peak of 2.00% expected by most analysts. Markets Drop-In (22nd June, 10:00 ET/15:00 BST): Join our Markets team for this special briefing on the outlook for equities, bonds and FX and a discussion about revisions to our forecasts. Register now

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