BoE expected to hike the policy rate by 25 bps – UOB

The BoE is broadly seen raising its key interest rate by 25 bps at its event on May 11, suggests Economist at UOB Group Lee Sue Ann.

Key Takeaways

“The most recent batch of UK data suggest the economy is holding up and inflation is proving extremely stubborn. We are expecting a 25bps hike in May. We bear in mind, though, that the rise in interest rates is taking place against a backdrop of difficult economic conditions in the UK.”

“This takes the form of low post-pandemic growth and the continued negative effects of Brexit, with the economic misery exacerbated by the impact of food and energy price inflation at the heart of the cost-of-living crisis, which is having a particularly harmful effect on lower-income households.”