The UK and the US are two countries where interest rates could rise similarly, according to interest rate market valuations.
The Bank of England has already narrowly raised its main interest rate by 50 basis points due to the UK's annual inflation rate rising to 5.5 percent in January this year, the highest reading since March 1992.
Forecasts show no imminent end to inflation
The biggest contributors to inflation were the prices of gas (28.3 percent), electricity (19.2 percent), housing and utilities (7.1 percent). Food (4.3 percent) and clothing and footwear (6.3 percent) also became more expensive. On the other hand, there was a slowdown in transportation costs (from 11.9 percent to 11.3 percent). On a monthly basis, consumer prices fell 0.1 percent, the first decline in a year, with forecasts calling for a 0.2 percent drop.
The outlook for a rapid reduction in the rate of inflation in the UK does not appear to be the best. Further data may show that producer prices rose 9.9 percent in January 2022, which would be the biggest increase since September 2008. This could translate into store prices soon, further bolstering consumer inflation and intensifying potential Bank of England action, which could positively impact the British pound. On a monthly basis, UK producer prices seemed to rise by 1.2 percent, accelerating inflation from 0.3 percent in December and beating the market consensus estimate of a 0.6 percent increase.
US: how to lower fuel and food prices?
In the United States, politicians are working on lowering food and fuel prices. This can be done, for example, by reducing taxes, which in turn can affect the valuation of the pace of interest rate hikes in the US and an interesting competition between GBP and USD.
Today at 8 pm the minutes of the last Federal Reserve meeting will be published, where the market may look for clues as to what the Fed will want to do at its next meeting - on March 16.
Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service)
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