The UK’s money markets are predicting that interest rates will rise to 4% by March next year.
The data, compiled by Refinitiv, shows that financial trades are less than confident that the Bank of England’s softly-softly approach will lower inflation.
Rates currently stand at 1.75%, with inflation at 10.1%.
The base rate is now expected to finish the year above 3% and could peak at close to 4.1% in June 2023. The bank is then expected to cut rates close to 3.8% by the end of next year amid expectations of fading inflationary pressures and a lengthy recession.
Yesterday Citi warned that inflation would hit 18.6% in January, requiring interest rates to exceed 7%. Goldman Sachs has predicted inflation will rise to 15%.
The bank’s monetary policy committee is next due to meet in mid-September and the City is currently expecting another 0.5 percentage point rate rise to 2.25%.
