"It is increasingly difficult to see how the U.K. avoids a recession as part of the process of bringing inflation down." Policymakers clearly feel that such a large move was warranted to try to keep a lid on inflation expectations. Data Wednesday showed inflation seems to be more embedded in the U.K. than elsewhere, leaving the BOE with "little option than to act tough," he says. The BOE raised rates by 50 basis points to 5.0% following a 25bp rise at the last meeting. On top of that, the Bank of England is now pushing ahead full steam with its quantitative tightening program, he says.

Source: Wall Street Journal June 22, 2023 12:53 UTC