BofA Now Sees Higher Inflation Peak

Front Short Sterling contracts are weaker in the last hour or so (though little respite for GBP), with some pointing to this BofA inflation forecast update out this afternoon: "CPI to peak at 4.2% in November 2021 & April 2022 [vs peak seen previously at 3.9%]... Food, utilities & used cars drive changes. RPI 5.5% vs. 5.1% before...We expect inflation to fall back to target in late 2022."

• While "the BoE should, in our view, look through temporary supply shock driven inflation, especially from energy..", BofA "forecast BoE to hike rates 15bp in February. But any further inflation surprises could mean December and May hikes."