Prospects of stagflation in Great Britain call into question the amount of rate hike

The worsening of UK economic forecasts will make the BOE’s management the most divided in its entire history. The reason for the contention was the level of increase in interest rates. In the future, the bank expects a four-way division.

Investors hope that the Monetary policy Committee will increase the key rate by 0.5% to the level of 3.5%. It will be the highest level for 14 years. The committee consists of nine members headed by Governor Andrew Bailey. 

However, the growing concerns of recession and unprecedented falling living standards provoked the discussion. The main matter of debate is the BOE’s ability to curb inflation which is still at a 41-year-high. Such a situation will force Bailey to find the appropriate option to solve the problems and probably exercise the casting vote. This should be done before December 15.

European economist at Nomura George Buckley thinks that there will be an active discussion at the meeting, which will probably end in a four-way division.