We do not yet know which of the three PM hopefuls (Boris Johnson, Rishi Sunak, Penny Mordaunt who have attracted early backing from Conservative MPs) will replace Liz Truss. Whoever is PM, we think a big fiscal tightening is on its way. This may mean that the recession will ultimately be deeper or longer than we expect and interest rates may not need to rise quite as far. But given the signs that domestic inflationary pressures remain strong, we are sticking with our forecast that interest rates will rise from 2.25% now to 5.00%.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services