JPM adds an extra hike and looks for 2.75% Bank Rate by August 2023

JP Morgan yesterday revised its growth forecast higher following the announcement of the "cost of living" fiscal package from Chancellor Sunak. It also now looks for an additional 25bp hike this year.

• "The support package is two to three times larger than the modest stimulus we had assumed in our growth forecast. We hence lift our GDP forecast by just under 0.5%-pt annualized on average from 3Q22-1Q23 (with some payback from 2H23."
• "While we recognize the downside risks in the growth outlook from the cost of living shock and global events, we are responding to [yesterday's] fiscal announcement by putting an extra 25bp hike into our BoE forecast for this year, in September. That would imply the BoE keeps on hiking at every meeting until November, taking rates up to 2% by year end (previously 1.75%) and then up to 2.75% by next August (previously 2.5%) - with the same assumption as before that tightening slows down to a quarterly pace from November."