Although the Monetary Policy Committee raised interest rates today by 75 basis points, from 2.25% to a 14-year high of 3.00%, it sent the strongest signal yet that it thinks rates won’t need to rise much above 4.00%. But with price/wage expectations still elevated, we think the inflation battle is far from won and that rates will peak at 5.00% rather than the 4.25% expected by most economists.
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