The focus this week will shift to the Bank of England, which issues its monetary policy decision on Thursday, along with updated economic forecasts. The BOE began its rate hike cycle well ahead of the Fed in December, but has been limited to moves of no more than 25 basis points.
Governor Bailey recently indicated that a larger 0.5% increase is “among the options on the table” going forward, raising some expectations of a contract break, although he cautioned that this is not “locked in”. However, the central bank is known for its communication deadlocks and doesn’t have the best track record when it comes to providing guidance around its intentions.
Similar to the Fed, the Bank of England is concerned about skyrocketing inflation, which is expected to top 11% later in the year, so we’ll also be eagerly awaiting updated forecasts.
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