Bank of England Hints at Possible Rate Hike Within 2021

Source: Bank of England

The Bank of England hinted at a possible interest rate hike as soon as November, with inflation seen to breach 4% amid the surge in energy prices.

• The central bank noted that some developments had strengthened the case for modest tightening, but uncertainties remain.
• Any tightening in policy would begin with a hike in interest rates, even if it comes before the end of its bond-buying program by the end of the year.
• Economists believe that the latest discussions open the possibility for a rate hike before the end of the year, even as it releases net stimulus.
• The BOE now expects to temporarily hover above 4% in the last quarter of the year, faster than its predictions in August and its target of 2%.
• Inflation has been driven by higher prices of gas, which could bring a significant upside risk in the United Kingdom energy markets and double consumer prices.