Deutsche Bank: Bank of England to be wary of rising inflation, rate hike possible

Sanjay Raja of Deutsche Bank stated in a report that raising interest rates is now a tangible risk facing the UK economy. He said that the message the Bank of England is sending by maintaining interest rates is that if rising inflation expectations lead to more persistent price pressures, the bank will remain vigilant. Raja said that if energy prices stay at current levels, policymakers may be forced to raise interest rates to curb inflation, while Bank of England staff currently expect inflation rates to be between 3% and 3.5% in the coming quarters. Raja said, "Following today's decision, the possibility of an interest rate hike has significantly increased, with all members indicating that they will have a better understanding of the situation by the time they make a decision in April."