Mitsubishi UFJ expects the Bank of England to raise interest rates to 4.25%

Mitsubishi UFJ expects the Bank of England to raise interest rates by 25 basis points at its next meeting and again in February next year, ultimately pushing rates to a peak of 4.25%. It is expected that the overall inflation rate in the UK will rise to over 4% in the coming months, with a quarter on quarter GDP growth rate of about 0.65%. The economy is expected to grow by 1.5% and 1.4% in 2026 and 2027, respectively. The rise in borrowing costs has compressed the fiscal space in the UK before the budget announcement to approximately £ 15 billion.