LONDON, Aug 6 (AFP): The Bank of England (BoE) could shock markets with an interest rate hike Thursday to keep inflation in check, despite expectations for no change because of slower economic growth, analysts said.
Most economists think the British central bank's rate-setting monetary policy committee (MPC) will leave rates at 5.00 per cent for the fourth straight month after a two-day meet that starts Wednesday.
However, pundits are not ruling out a surprise quarter-point hike to 5.25 per cent after British 12-month inflation spiked to a 16-year high in June on the back of surging food and fuel prices.
The European Central Bank (ECB) was also forecast to keep Eurozone borrowing costs at 4.25 per cent Thursday amid concerns about record eurozone inflation coupled with sluggish economic growth.
Analysts warned that British inflation would spike even higher in the coming months because of recent steep price increases from domestic gas and electricity suppliers.
Energy firm Centrica last week hiked its gas prices by 35 per cent because of the rocketing cost of wholesale energy.
"Pressures for higher rates are likely to linger on the committee," said Investec economist Philip Shaw, who is calling for no change this month.
BoE could spring surprise interest rate hike
FE Team | Published: August 07, 2008 00:00:00 | Updated: February 01, 2018 00:00:00
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