Inflation has peaked, but how far will it fall?

The Bank of England can breathe a sigh of relief knowing that CPI inflation has peaked. But with activity holding up and wage growth still strengthening, the 2.0% inflation target is still a long way from being hit. As such, the Bank will still probably raise interest rates by 50 basis points tomorrow, from 3.00% to 3.50%, but the chances of a 75 basis points hike and of rates reaching our forecast of 4.50% look a bit slimmer.

We will be discussing the policy decisions of the Bank of England, the Fed and the ECB in a Drop In on Thursday 15th December at 3pm GMT. (Register here.)