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Quarter-point Bank of England rate hike seen as virtual lock after surprise acceleration in inflation

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What was an uncertain Bank of England decision became almost a lock after U.K. inflation data came in unexpectedly hot.

The odds of a quarter-point hike, to 4.25% from 4%, moved to 97% after the data from the Office for National Statistics on Wednesday showing inflation accelerating to 10.4% year-over-year in February.

The yield on the 2-year gilt
TMBMKGB-02Y,
3.412%

rose 15 basis points to 3.44%. The British pound
GBPUSD,
+0.52%

jumped to $1.2287 from $1.2217.

It was the first upwards move since October, when inflation ran at a 11.1% clip. And worryingly, core inflation accelerated as well, moving to 6.2% from 5.8%.

“This unexpected reacceleration in inflation despite the cumulative near-400bps of monetary tightening over the past eighteen months will not be welcomed by policymakers,” said Ellie Henderson, an economist at Investec Securities.

“When deciding the appropriate level of the Bank rate the MPC will have to assess which is the lesser of two evils: the risk of inflation being higher for longer or the current threat to financial stability stemming from the rapidly evolving fears of a banking crisis,” she added.

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Jake

Jacob Keiter is a husband, a writer, a journalist, a musician, and a business owner. His journey to becoming a writer was one that was paved with challenges, but ultimately led him to find his true calling. Jacob's early years were marked by a strong desire for creative expression. He was always drawn to music, and in his youth, he played in several bands, chasing the elusive promise of fame and success. However, despite his best efforts, Jacob struggled to find the recognition he craved. It wasn't until he hit a low point in his life that Jacob discovered his love for writing. He turned to writing as a form of therapy during a particularly difficult time, and found that it not only helped him to cope with his struggles, but also allowed him to express himself in a way that he had never been able to before. Jacob's writing skills quickly caught the attention of others, and he soon found himself working as a journalist for The Sun out of Hummelstown. From there, he went on to contribute to a variety of publications, including the American Bee Journal and Referee Magazine. Jacob's writing style is reflective of traditional journalism, but he also infuses his work with a unique voice that sets him apart from others in his field. Despite his success as a writer, Jacob also owns another business, JJ Auto & Home, which specializes in cleaning. Jacob's commitment to excellence is evident in all of his endeavors, whether it be in his writing or in his business ventures. Today, Jacob is the author of two books and continues to inspire others through his writing. His journey to becoming a writer serves as a reminder that sometimes our darkest moments can lead us to our greatest achievements.

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