Stubborn UK inflation may lead to 7% interest rates, economists warn

JP Morgan says risk of hard landing' for economy heightened, with higher borrowing costs hitting business

The Bank of England may need to push interest rates to as high as 7% to tackle stubbornly high inflation, economists have warned, amid fears the soaring cost of borrowing could drive the economy into recession.

With households under growing pressure from rising mortgage costs, the US investment bank JP Morgan said there was a risk that persistent inflationary pressures could lead the central bank to raise interest rates by more than expected.