The Bank of England is expected to hike interest rates for the 12th consecutive meeting on Thursday as inflation continues to run hot, but the Outlook Remains Murky. The U.K. economy has held up better than expected so far this year, though GDP flatlined in February as widespread strikes and the cost-of-living squeeze hampered activity, while the labor market continues to look resilient. Annual headline inflation remained stubbornly above 10% in March, driven by persistently high food and energy bills, while core inflation also remained unchanged, highlighting the risk of entrenchment. The Bank expects it to fall rapidly from the middle of 2023 to reach around 4% by the end of the year, however. The market almost unanimously expects the Monetary Policy Committee to opt for another 25 basis point hike on Thursday, with a majority of economists expecting a 7-2 split vote to take the Bank Rate from 4.25% to 4.5%. However, projections beyond that begin to diverge.

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