Bank of England to send rates to decade-high by this summer

The Bank of England will raise interest rates to their highest level in over a decade by the summer, City experts are forecasting.

Soaring inflation will prompt the Bank to ignore the potential hit to the economic recovery from a sharp reduction in Brits’ spending power and send rates to 1.25 per cent by August, according to Britain’s largest bank HSBC.

Threadneedle Street is expected to embark on a sharp policy pivot this year by placing greater emphasis on controlling inflation at the expense of the oiling the UK economy.

The Bank has already completed the early stages of this tightening cycle, hiking rates at back-to-back meetings for the first time since 2004.

The world’s other top central banks are also flexing their inflation fighting muscles, with the US Federal Reserve widely anticipated to lift rates at their next meeting in March.

Some Wall Street economists are betting on Fed Chair Jerome Powell defying recent history and sending rates 50 basis points higher, something they have not done since the 1980s, after fresh data released last week revealed US inflation is running at 7.5 per cent, its highest level in 40 years.