(CercleFinance.com) – Reacting to British inflation (+10.1% at an annual rate in July) published this morning, Liberum believes that it calls for further rate hikes from the Bank of England , and now expects its key rate to peak at 2.75%.
‘UK price inflation, as usual in 2022, outperformed consensus expectations as food eclipsed energy as the main contributor to the monthly acceleration in headline inflation ‘, notes the analyst.
‘Yet even if monthly inflation rates continue at current extremes, inflation in the UK would fall to 7.4% by mid-2023,’ he continues, adding that with inflation rates ‘more reasonable’ monthly inflation would fall to 2.5% by mid-2023.
As the Bank of England pointed out in early August, Liberum predicts a UK recession over the next 12 months, likely starting in the fourth quarter of 2022.
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