Even though a further surge in CPI inflation to a 40-year high of 10% in October will take the economy to the brink of recession, we think the Bank of England will raise interest rates from 0.75% now to a peak of 3.00% in 2023 to contain domestic price pressures and stamp out the recent rises in price expectations that risk inflation getting get stuck above the 2% target. Our forecasts envisage inflation being higher, GDP growth being lower and interest rates rising further than investors and other analysts expect.
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