Bank of England likely to raise interest rates one more time

© Reuters. Bank of England likely to raise interest rates one more time

Proactive Investors - The Bank of England's Monetary Policy Committee is expected to raise interest rates on Thursday, although there is a growing belief this will be the last increase in the cycle.

Goldman Sachs (NYSE:GS) thinks that the MPC would need to see clear signs that wage and services inflation have turned a corner before pausing, even if the labour market is cooling and the MPC wishes to implement a policy path with a flatter peak.

As such, the investment bank continues to expect a 25bp hike at this week’s meeting.

But looking ahead to the November meeting, Goldman said it sees "a greater chance that sequential wage and price pressures will have cooled sufficiently to allow the MPC to go on hold.”

Citi believes also thinks this week's move will probably be the last.

“We now look for no change in November, with a full set of forecasts plausibly providing a basis to pause. We continue to see cuts from May 2024.”

ING’s developed markets economist, James Smith said he wouldnt rule out a pause at this week's meeting.

"It does feel like the Bank is actively trying to set the stage for a pause. Could that happen this week? We wouldn’t totally rule it out," he said.

" A strategy, whereby the BoE pauses in September but hints strongly that it could hike again in November, could be tempting for policymakers this week," he suggested.

Having said all that, though, ING still expects the BoE to raise interest rates on Thursday, for the last time in this cycle.

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