UK Latest: Higher-Than-Expected Inflation Adds Pressure on BOE to Hike Rates

The transcript discusses the unexpected rise in core inflation rates, which exceeded both economists' and the Bank of England's forecasts. The analysis highlights the challenges in economic forecasting, particularly the assumption that inflation would decrease as quickly as it rose. The impact of base effects, such as the previous year's energy bill increases, is noted, along with the persistent high food price inflation affecting the poorest. Concerns are raised about core inflation, excluding food and energy, which has risen unexpectedly. This has led to traders adjusting their expectations for peak interest rates.

What was the actual inflation rate compared to the economists' expectations?

• 8.7% actual, 8.2% expected

• 8.4% actual, 10.1% expected

• 8.2% actual, 8.7% expected

• 10.1% actual, 8.4% expected

What assumption did the Bank of England make about inflation?

• Inflation would not affect energy prices

• Inflation would remain constant

• Inflation would fall as fast as it rose

• Inflation would rise faster than it falls

What accounted for the fall in inflation according to the transcript?

• Increase in food prices

• Decrease in energy bills

• Base effects

• Improved economic forecasting

What is the concern regarding core inflation?

• It is unaffected by food prices

• It is rising unexpectedly

• It is holding steady

• It is decreasing rapidly

What is the new predicted peak interest rate according to traders?

• 6.0%

• 5.5%

• 4.5%

• 5.0%