Pressure on Bank of England to hike interest rates to 5% despite expected dip in inflation

The Bank of England is under pressure to raise interest rates by as much 0.5 percentage points to 5 per cent this week in a fresh headache for Rishi Sunak as he faces a political backlash over theThe Office for National Statistics is expected to confirm on Wednesday that inflation is continuing to fall, with Deutsche Bank predicting it will nudge downwards to 8.5 per cent from its previous level of 8.7 per cent.

But with prices remaining stubbornly high, the Prime Minister and Chancellor have warned they have no choice but to continue to try driving down inflation even asThe Bank of England is widely expected to raise rates by 0.25 percentage points on Thursday despite a dip in inflation, but some experts are saying it may have to rise by as much as 0.5 percentage points which would bring it to 5 per cent.

The Bank of England has hiked rates 12 consecutive times since December 2021, though the two most recent increases have been by a margin of 0.25 percentage points. Its economists will be voting on Thursday on how much to increase by for the 13th time in one of their most difficult decision in recent years.

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