A shift from the 75 basis point hike in interest rates in November to a 50 basis point rise, from 3.00% to 3.50%, at the policy meeting on Thursday 15th December would show that the Monetary Policy Committee thinks it is getting closer to the peak in rates. Indeed, the Committee may indicate that it is starting to think more about the level of rates rather than the pace of hikes. Even so, we think it will want to see more concrete signs that domestic inflationary pressures are easing before halting the hikes. Our forecast is that rates will peak at 4.50% (the consensus is 4.25%) and won’t be cut until 2024.
We will be discussing the decisions of the BoE, the Fed and the ECB in a Drop In on Thursday 15th December at 3pm GMT. (Register here.)
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