UK interest rates increase expected after services sector activity accelerates

AI desk brief

The Bank of England is expected to raise rates by 0.25 percentage points to 4% on Thursday after October’s services PMI rose to 52.8 from 52.1 and input-price inflation reached a five-month high. Markets expect three further increases, versus one or two among most City economists. Eurozone inflation also rose to 4% from 3.8%, making a December ECB hike more likely. Tighter policy could weigh on gold if expected real yields rise, but nominal-rate forecasts alone do not establish that outcome; UK services firms’ uncertain cost pass-through complicates the inflation outlook.