There is currently a probability of 65% that the BOE will increase rates by another quarter-point at its next meeting. CPI results that are different than current expectations can change these expectations. A number of factors could drive inflation beyond current forecasts.
But, that’s not the only issue that could move the pound substantially. Some central banks are winding down their rate hikes after inflation starts to drop. The UK has a different situation, after a year-long series of hikes with inflation still at double digits.
What’s expected
The inflation rate is expected to remain in double-digits for one more month but will be 10.2% Prior to this, 10.4% was reported. Yes, that’s lower than the peak at over 11%, but it’s still five times the BOE’s target and has remained persistently stubborn.
Core rate expected to drop from 6.2% to 6.0%. That’s in line with the core rates of other major currencies, such as the dollar and the Euro. The BOE is primarily concerned with the core rate, which implies…
