Four Quarter-Point Rate Hikes Priced In for UK as Economy Grows 0.4%

Financial markets are now pricing in four quarter-point increases to the Bank of England interest rate over the next year, from its current level of 3.75%.

This comes as stronger-than-expected UK economic growth and surging energy prices raise concerns about persistent inflation.

The UK economy grew by 0.4% in July, beating expectations, and indicating that economic activity remains more resilient than policymakers may have anticipated.

Andrew Wishart, senior UK economist at Berenberg, noted that the unexpectedly strong GDP figure suggests interest rates may not be restraining the economy as much as some Bank of England policymakers had assumed.