LONDON (Reuters) - Credit Suisse (SIX:CSGN) on Wednesday bumped up its estimate for peak Bank of England interest rates to 4.75% from 4.5%, citing recent upside surprises to growth, inflation and labour market data.
"We now expect the BoE to hike rates twice more in May and June by 25 basis points each," Credit Suisse economists Sonali Punhani and Samuel Adams Williams said in a research note.
Their revised outlook peak Bank Rate follows a move by Goldman Sachs (NYSE:GS) last Thursday to revise up its expectation for peak Bank of England rates to 5%.
While Credit Suisse said the extent of policy tightening feeding into Britain's economy implied a mild recession later this year and weak growth in 2024, it thought the BoE would feel pressured to keep raising rates in the near term by recent stronger-than-expected inflation data.
The most acute part of the global banking stresses had likely passed, the economists from Credit Suisse added.
The BoE's Bank Rate stands at 4.25% and investors in interest rate futures are putting a roughly 96% chance on an increase to 4.5% on May 11 after the BoE's next scheduled meeting, and a 65% probability of it hitting 5% by November.
The next Reuters poll of economists on the outlook for BoE rates is due to be published on Friday.