he Bank of England is poised to boost rates of interest for the thirteenth time in a row after disappointing inflation figures confirmed worth rises haven't eased.

The UK’s Consumer Prices Index (CPI) was unchanged in May at a price of 8.7%, in response to the Office for National Statistics.

It got here in above analysts’ expectations for the fourth month in a row, and indicated that inflation has remained persistent regardless of the Bank’s efforts to convey it right down to the two% goal.

Economists agree that the Bank’s Monetary Policy Committee (MPC) is prone to increase rates of interest on Thursday, from the present price of 4.5%,  and that extra hikes are on the horizon.

Financial markets expect rates of interest to rise by 0.25 share factors to 4.75%. But there's a 40% likelihood that the speed might be pushed up even greater, by 0.5 share factors to five%.

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With worth momentum frequently working above expectations alongside robust wages knowledge, the Bank has no selection however to proceed on a path of elevating rates of interest a number of extra occasions

“Settling on the larger of the two risks adding fuel to the fire for rate expectations, a message the MPC will think long and hard about given the impact this would have for what is now termed the ‘mortgage time bomb’ for households and landlords that refinance borrowing,” mentioned Sandra Horsfield, an economist for Investec Economics.

It comes as considerations have mounted over the mortgage market, with the typical two-year mounted residential mortgage price surpassing 6%, in response to knowledge from Moneyfactscompare.co.uk.

Moreover, expectations of the place charges will peak have surged in current weeks, with markets now anticipating a excessive of 6% by early subsequent 12 months. It would imply charges hit the best stage in additional than 20 years.

Chancellor Jeremy Hunt mentioned he has spoken to shopper champion Martin Lewis, who on Tuesday mentioned {that a} mortgage ticking time bomb is now “exploding”, forward of assembly with Britain’s main lenders on Friday.

Banks have additionally come beneath fireplace from a bunch of MPs on the Treasury Committee for not elevating financial savings charges as a lot as borrowing prices.

However, the Bank of England has mentioned it is going to proceed to boost rates of interest so long as it sees indicators of inflationary stress.

Economists have mentioned that necessary indicators of persistent inflation, particularly core inflation, which strips out the worth of power, meals, alcohol and tobacco, and wage progress, have remained elevated, which is prone to fear MPC policymakers.

Core CPI rose to 7.1% in May from 6.8% in April, the ONS mentioned, and is commonly extra in focus for the Bank when it units rates of interest.

Rob Morgan, chief funding analyst at Charles Stanley, mentioned: “Getting the inflation genie back into the bottle is proving troublesome for the Bank of England.

“With price momentum continually running above expectations alongside strong wages data, the Bank has no choice but to continue on a path of raising interest rates several more times.”

However, a spokesman for the Prime Minister mentioned he's nonetheless on monitor to satisfy the Government’s goal of halving inflation by the tip of the 12 months, regardless of final month’s setback.