LONDON (ShareCast) - (Sharecast News) - Economists at Bank of America raised their short-term inflation forecasts for the UK, predicting that Bank would hike short-term interest rates four more times as it tried to navigate both the risk of a recession and of too-high inflation.
The annual rate of increase for consumer prices in the UK was now seen averaging 7.0% in 2022 and 3.9% for 2023.

Those forecasts were 22 and 27 basis points higher than previously anticipated, due in part to changed expectations for used car values and the impact of higher CPI in 2022 on indexed prices - such as rail fares - in 2023.

Annual CPI was now seen peaking at 8.3% in April, followed by a second peak of 7.4% in October and with inflation seen remaining above 3.5% until October 2023.

"The central case provides a tricky backdrop for the Bank of England.

"On the one hand inflation will cut real incomes enough to risk recession, but inflation will be high for such an extended period that we think the BoE cannot rely on inflation expectations behaving."

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