On Thursday, the Bank of England is likely to hike interest rates by the largest since 1995 to prevent a jump in inflation from becoming ingrained in Britain's economy.
When it announces its decision at 1100 GMT, most investors and economists anticipate that the BoE will hike its benchmark rate by 0.5 percentage points to 1.75 percent, its highest level since late 2008 at the height of the global financial crisis.
As a result of Russia's invasion of Ukraine and post-pandemic strains on the global economy, the primary inflation rate in the United Kingdom has risen to 9.4 percent. According to the Resolution Foundation, it might reach 15 percent in early 2023.
The BoE, which has already increased borrowing prices five times since December, stated in June that it would take decisive action if inflationary pressures intensified.
Since then, public inflation expectations and corporate pricing strategies have moderated, providing the Monetary Policy Committee with an argument for maintaining its quarter-point rate adjustments.
After large rate hikes by the U.S. Federal Reserve, the European Central Bank, and other central banks, the pound's value has weakened, adding to inflationary pressures on Governor Andrew Bailey and his colleagues.
"We know they're worried about sterling and in that sense they don't want to be left as the odd one out by not joining the 50-basis-point club," said James Smith, an economist with ING.
More than 70 percent of 65 economists surveyed by Reuters and published on Monday anticipated a half-point increase.
On top of everything else, the leading candidate for Britain's next prime minister, Liz Truss, has questioned the Bank of England's inflation-fighting record.
She desires to establish "a clear direction of travel" for monetary policy and reassess the BoE's mandate.
However, some analysts believe the Bank of England may proceed with caution.
The global economy is showing increasing signs of slowing, core inflation has declined, and the central bank's updated projections for the next two to three years are likely to show inflation falling dramatically.
In its most recent predictions released in May, the Bank of England predicted that the British economy will barely expand before 2025.
The National Institute of Economic and Social Research, a think tank, predicts that an impending recession will compel over a million households to choose between purchasing food and heating their houses.
In light of the projection, Samuel Tombs, an economist at Pantheon Macroeconomics, expressed skepticism that the MPC will determine that the Bank Rate has to increase as rapidly as the markets anticipate.
The BoE is also expected to provide additional information on how it intends to begin selling down the government bond holdings it amassed for more than a decade of economic stimulus.
Bailey stated one month ago that the BoE might lower its 844 billion pound gilt holdings by 50 to 100 billion pounds for one year.