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According to JPMorgan, there is a risk that the Bank of England will be forced to raise rates up to 7% to stem inflation, causing the economy to “hard land”.
In fact, some indicators suggest that the key rate of the institution led by Andrew Bailey could rise by another 2 percentage points compared to the current 5%, increasing the risks of recession. A “hard landing” would therefore seem increasingly likely.
Unexpectedly strengthening wages and inflation data stoke bets that the central bank should continue to raise borrowing rates over the summer. Currently, investors are expecting a peak of 6.25% by the end of the year, the highest level in 25 years.