Although the new Prime Minister, Liz Truss, has saved some of the blushes at the Bank of England by reducing the probable peak in inflation from at least 14.5% to around 10.5%, the resulting support to economic activity from her freeze to utility bills will just mean that inflation is higher than otherwise further ahead. As such, the Bank will probably have to raise interest rates higher. We expect a 50 basis point (bps) rate hike, from 1.75% to 2.25%, at the policy meeting on Thursday 22nd September (postponed from 15th) and now think rates will peak at 4.00% (up from 3.00% previously).
We are resending a revised version of this BoE Watch to take into account the developments since the original was published on Thursday 8th September.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services