BoE set to raise rates to 4.75pc

LONDON, June 17 (Reuters): The Bank of England looks set to raise interest rates by a quarter point to a 15-year high of 4.75 per cent on June 22, its 13th straight rate rise as it fights unexpectedly sticky inflation that risks making it a global outlier.

Investors this week bet the Bank of England might hike rates as high as 6 per cent this year - well above where the US Federal Reserve or the European Central Bank are expected to go, and a level not seen in Britain since 2000.

BoE Governor Andrew Bailey told a parliament committee on Tuesday inflation was taking "a lot longer than expected" to come down and the labour market was "very tight".

Bailey was speaking just after official figures showed basic pay in the three months to April rose by an annual 7.2 per cent - the fastest on record, excluding periods where the data was distorted by the COVID-19 pandemic.

While pay is still falling when adjusted for inflation, these numbers caused markets to ramp up their bets on BoE rate hikes, and pushed two-year government bond yields to their highest since 2008.