Spooked in Threadneedle Street – UK inflation and interest rates
Latest HSBC Economic commentary
Key points
On 16December, the Bank of England announced an increase in UK Bank Rate from 0.10% to 0.25%, only the third time it has raised interest rates since the global financial crisis.
The catalyst for this decision was the acceleration of inflation in recent months, with both the Bank of England and HSBC expecting the annual CPI rate to reach 6% in April 2022.
HSBC anticipates three more rate hikes during 2022, which will take Bank Rate to 1.00% in August. But there are clear upside risks to this forecast so that borrowers should be prepared for the eventuality that 1.00% is not the peak of the cycle, especially if inflation fails to ebb as quickly as expected after the spring peak.
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