Interest rates are expected to nearly triple to 6.25% by May, as the Bank of England warns that the government’s debt-laden economic plan will require a “significant monetary response”.
Futures markets are now forecasting interest rates will hit 6.25% by May, the highest level in 25 years, as the BoE attempts to prop up the pound and rein in inflation. Rates currently stand at 2.25%, already the highest since the global financial crisis.
Chief economist Huw Pill has signalled that the bank will not act to raise rates before its next scheduled meeting in November, but implied that it “would do its job” and raise rates to combat inflation.
The chancellor’s fiscal plan, which will be published in November, is expected to further tighten public spending, as the chancellor tries to restore order to the public finances after announcing £45bn of debt-funded tax cuts.
