BoE Sees Growing Case For Rate Rise As Inflation To Stay Higher For Longer

• The Bank of England said the case for higher interest rates "appeared to have strengthened" on Thursday after it increased its forecast for inflation at the end of the year to over 4%, more than twice its target rate. 
• The BoE said it expected the overshoot to be temporary, but two policymakers called for an immediate halt to the British central bank's 895 billion pound ($1.23 trillion) bond purchase programme, which is due to run until year-end. 
• After the BoE statement, sterling interest rate futures priced in a 90% chance that the BoE would raise rates by February, up from just over 60% before, though some economists say this is premature given the challenges to growth. 
• The Sterling rose by almost a cent against the U.S. dollar and two-year British government bond yields surged by their most since March 2020 as traders bet on an earlier rate rise by the BoE, which would be the first major central bank to hike since the COVID-19 pandemic.

(Source: Reuters)