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Govt’s fiscal plans to force the Bank to hike rates to 4.00%

The hawkish 50 basis point (bps) hike in interest rates today, from 1.75% to 2.25%, was partly driven by the government’s plans to dramatically loosen fiscal policy and supports our view that the Bank of England will raise rates to a peak of 4.00% and won’t pivot to interest rate cuts until 2024.

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