This week it is expected that Bank of England (BoE) are set to raise interest rated even further and economists at Deutsche Bank predict they could be raised as high as 4.5%.
Economists at the BoE have suggested that they could be raised by a minimum of 5%, which reflects a cooling rate increase since the bank issued in November a 0.75% rise.
The nine members of the Monetary Policy Committee (MPC) will meet to decide what the official rate in the UK will be, which is expected to raise from 3% to 3.5%.
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Experts at ING have predicted in 2023 the rate will peak at 4% and, ING’s James Smith, Antoine Bouvet and Chris Turner wrote, “The forecasts released back then suggested that keeping rates at 3% would see inflation overshoot (just) in two years, while raising them to 5% would see an undershoot.
“In other words, we should expect something somewhere in the middle, and that’s why we think Bank Rate is likely to peak at 4% early next year.”
However economists at Deutsche Bank, have said they expect interest rates to increase to 3.5% on Thursday.
A spokesperson for the bank said, “Some good news around softening inflation expectations and easing recruitment difficulties will allow the MPC to slow the pace of tightening, avoiding a second consecutive 75bps [basis point] hike.
“But the Bank isn’t out of the woods just yet.
“Persistent inflationary pressures alongside lingering labour market tightness should result in another “forceful” hike.”
The economists at Deutsche Bank are predicting that interest rates could rise as high as 4.5% in 2023, which would be the highest since the 2008 financial crash.