For an embattled Chancellor, the news from the economy is likely to get worse before it gets better. But despite the worrying signs for economic activity over the coming months, with CPI inflation now well above the 2% target and more evidence that price pressures are broadening and filtering through to price/wage expectations, we continue to think the Bank of England will have to raise interest rates further than it expects, to at least 2.00% in this cycle.
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