BOE could raise rates twice by May next year

Bloomberg

The Bank of England (BOE) could raise interest rates twice by May to curb a surge in inflation, but that largely depends on how high unemployment rises after the end of the government’s furlough program, according to Bank of America Merrill Lynch.
“Furlough-end remains key,” BofA economist Robert Wood said. “If it goes well, or the BOE feels pressured by spot inflation, it could hike
as soon as December and a second time next May.”
The US bank’s main scenario now anticipates the BOE raising its key rate by 15 basis points to 0.25% in February instead of May. BofA shifted its view after BOE said that the case for tightening monetary policy has strengthened.
The central bank also said it expects inflation to exceed 4% later this year, more than double its target. “If furlough end results in no rise in unemployment, a hike by or before February would in our view be a very high likelihood,” Wood wrote. “But we think that scenario is far from guaranteed.”
The central bank expects unemployment to peak below 5%, well below its previous scenarios at the height of the pandemic crisis.