BoE: Terminal rate forecast increased from 4.75% to 5% due to upside surprise in UK inflation – Credit Suisse BOE Inflation UnitedKingdom Growth Banks
Economists at Credit Suisse have increased their BoE terminal rate forecast to 5% due to the beat in UK inflation.“We have increased our BoE terminal rate forecast from 4.75% to 5.0%. We now expect two more 25 bps hikes from the BoE , compared with one before and no rate cuts in 2023. This is driven by the upside surprise in UK inflation.”
“We have revised up our 2023 inflation forecast from 7.0% to 7.2% and 2024 inflation forecast from 2.2% to 2.3%. We expect core inflation to remain sticky around the 6.5% mark in H1 2023 and fall convincingly only in H2 to close to 5% by end-2023 .”to less than market pricing . Our expectation is for headline inflation to continue to fall and for some of the strength in core inflation to reverse in the coming prints. We also expect a mild recession that should allow the BoE to pause in August .
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