The Bank of England and the European Central Bank are forecast to lift their main interest rates by a half percentage point on Thursday, in what will likely narrow the differential between their rates and that of the U.S. Federal Reserve. The Bank of England is forecast to take interest rates to 4% from 3.5%, and the European Central Bank is expected to take its main rate to 2.5% from 2%, a day after an expected quarter-point rate rise at the Federal Reserve.
Unlike the U.S., core inflation in the eurozone has been rising — climbing in December to a rate of 5.2% from 5% in November. In the U.K., core CPI stayed at 6.3%. Economists at BNP Paribas estimate that wage growth in the U.K. is at its highest level since the early 1990s. That said, there’s also data pointing to a slowing economy, particularly in the U.K. where the latest purchasing managers index slumped to its worst level in two years. European Central Bank officials have pushed back at a Bloomberg News report saying the central bank would dial down the pace of rate hikes after making a 50 basis point increase on Thursday. In December, Pr …