The Bank of England, one of the first movers in what looks set to be a rapid global tightening of monetary policy, this week will give a big clue about how far and fast it will move in combating inflation.
Policy makers led by Governor Andrew Bailey are expected to hike interest rates to 0.5% on Thursday, according to a survey of economists by Bloomberg. That would complete the first back-to-back increase since 2004 and open the question of whether more increases will follow.
The central bank’s latest forecasts also due with the decision will be key part of the answer. Analysts also are looking for words from Bailey at a press conference about how policy makers will respond to a surge in energy costs that’s helping drive up the prices at the fastest pace in three decades.
“More hikes are likely given the scale and persistence of inflation,” said Sanjay Raja, an economist at Deutsche Bank AG, who expects two hikes this year and another two in 2023. The risk is, he said, that “more will be needed and perhaps at a faster pace.”