The Bank of England followed the Fed’s example by forging ahead today with a 25 basis point (bps) interest rate hike, taking rates from 4.00% to 4.25%. This could prove to be the last hike of the tightening cycle. But if wage growth and CPI services inflation strengthen further, rates could well rise to our forecast of 4.50%. Either way, the turmoil in the banking sector makes us a bit more confident in our view that rates will be cut in 2024 to around 3.00%, which is more than is widely expected.
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