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Essentials of Monetary Policy

Bank of England: A 50 Bps Rate Hike to Wrestle down High Inflation

June 22, 2023
Hendrix Vachon
Principal Economist

The Bank of England (BoE) raised its Bank Rate by 50 basis points today, bringing it to 5.00%. According to the most recent data released earlier this week, headline inflation was unchanged in May at 8.7%—the highest of any G7 member. Even more concerning is core inflation, which strips out food and energy. It jumped from 6.8% to 7.1% in May and is close to 11% if we just look at the annualized change over the past three months. Our latest forecast called for a 5.50% terminal rate in the United Kingdom. It’s likely to go higher than that if we don’t see more progress on inflation soon.