The Bank of England (BoE) is poised to raise borrowing costs for the 12th meeting in a row on Thursday, as it tries to tackle stubbornly high inflation that stands at double the level of the United States and much higher than in the euro zone too.
Investors are fully pricing in another quarter-of-a-percentage point increase in Bank Rate, taking the BoE's benchmark rate to 4.5%, when the Monetary Policy Committee announces the outcome of its May policy meeting at 12 p.m. .
A poll of economists by Reuters earlier this month showed most expected the BoE would hold rates at 4.5% for the remainder of this year after an increase in May. "We expect that the Bank will only start to reduce rates from 2024 Q2 given resilient growth momentum," Goldman Sachs economist James Moberly told clients this week.
Two of the nine MPC members - Swati Dhingra and Silvana Tenreyro - voted in March to keep rates on hold and are expected to have done so again in May because they think the full impact of the BoE's 11 rate hikes to date has yet to be felt.But Governor Andrew Bailey and most of his colleagues have shown they remain uneasy with an inflation rate that held above 10% in March - more than five times their target - with pay growth also far above its historical average.
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