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Domestic inflation easing, but labour market still tight

The easing in core services inflation suggests that interest rates won't rise much further, perhaps from 4.00% now to a peak of 4.25% or 4.50%. But we suspect the Bank of England will need to see more convincing signs of slower pay growth before it can judge that inflation is firmly under control. That's why we continue to expect rates to stay at their peak level until early next year.

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