ALBAWABA – Sticky May inflation data in the United Kingdom (UK), published Wednesday, may force the Bank of England to raise the benchmark UK interest rate to the highest levels in more than 20 years, according to Bloomberg.
Traders expect key UK interest rate to 6 percent by December, Bloomberg reported.
On Thursday, the BOE is expected to raise rates by 25 basis points to 4.75 percent.
However, in light of the newly released inflation data, chances of a 50-basis point hike on Thursday are rising, the New York-based agency highlighted.
Hiking the key UK interest rate would send Britain’s economy into a state of shallow recession, as per Bloomberg Economics.
Accordingly, the country’s gross domestic product would shrink by about 0.3 percent in 2023 and 1.4 percent in 2024, the New York-based agency explained.
Just a month ago, bets were on a terminal rate below 5 percent, a level still seen as the most likely by economists surveyed by Bloomberg.
