Following a string of record high inflation figures in the UK, the Bank of England (BOE) is expected to continue raising interest rates for the thirteenth time in a row.
Ahead of the meeting that will take place tonight, the market places 3 possible scenarios on the BOE's decision.
1. Interest rates up 50 basis points and hawkish indicators
The BOE will raise interest rates a further 50 basis points, and is hinting at further rate hikes.
Policymakers expressed concern over inflation and wages that continued to strengthen.
2. Interest rates up 25 basis points but hawkish
The BOE will raise rates by 25 basis points as expected by the majority of the market.
Policymakers offered more hawkish statements about inflation falling more slowly than expected.
3. Interest rates up 25 basis points, but dovish
The BOE will raise rates by 25 basis points as expected by the majority of the market.
Reiterating the guidance that 'if there is evidence of more sustained pressure, then further tightening is required'.
From the 3 scenarios above, what do the readers expect for the BOE results?
If we look back at the published economic data, overall the readings are recorded to be strong.
The UK jobs market unexpectedly showed a strengthening in April, followed by average wage growth that remained high.
New inflation data released on Wednesday showed a continued high reading of 8.7% in May, falling short of expectations to drop to 8.4%.
This has added further support to investors' expectations that the BOE will continue to implement interest rate hikes tonight.
