THE Bank of England is set to raise interest rates for the 15th time on Thursday to their highest since 2008.
But experts predict that will be the last hike for the forseeable future.
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Money markets are 80 per cent sure the Bank’s Monetary Policy Committee will vote to lift rates for a 15th time in a row from 5.25 to 5.5 per cent.
It will hurt households and firms as borrowing will become even more expensive.
A two-year mortgage rate is now 6.66 per cent, compared to 2.3 per cent in 2021, says Moneyfacts. But traders reckon the rise will be the last. Earlier forecasts were for increases until the end of the year.
Simon French, at Panmure Gordon, said that the “market likelihood is bang on 5.5 per cent being the peak, compared to 6.5 per cent on July 5”.
The Bank is having to balance mixed economic signals.
Recent wage data showed high pay rises yet figures last week illustrated economic contraction in August.
Experts said this showed ramping interest rates from 0.1 per cent in 2021 to 5.25 per cent were finally starting to squeeze the economy.
Yet Nouriel Roubini, the man dubbed Dr Doom for predicting the 2008 financial crash, said the economy would be strangled by high inflation, unemployment and poor growth unless rates were lifted to 5.75 per cent.
