We think the Bank of England may opt to raise interest rates further from 4.25% sooner rather than later. Our central forecast is for interest rates to rise from 4.25% now to a peak of 4.50% and for them to stay there for all of this year. While the turmoil in the banking sector is likely to accelerate the coming economic weakness, we think domestic inflationary pressures will remain sticky for most of this year.
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