Bank of England: A 50 Bps Rate Hike to Wrestle down High Inflation

The Bank of England (BoE) raised its Bank Rate by 50 basis points today, bringing it to 5.00%. According to the most recent data released earlier this week, headline inflation was unchanged in May at 8.7%—the highest of any G7 member. Even more concerning is core inflation, which strips out food and energy. It jumped from 6.8% to 7.1% in May and is close to 11% if we just look at the annualized change over the past three months. Our latest forecast called for a 5.50% terminal rate in the United Kingdom. It’s likely to go higher than that if we don’t see more progress on inflation soon.