GDP bounce leads to bets on 2% rates Markets are pricing in an interest rate of 2% by the end of the year after official figures showed GDP rebounded last year to grow by 7.5%. Although it marks a healthy bounceback, it comes after the economy crashed 9.4% in 2020 when it was shut down due to Covid. Traders are expecting the Bank of England to tighten rates from 0.5% today to 2% by November in three or four steps. Inflation is forecast to rise to a peak of 7.25% in April when the energy price cap increase comes into effect, wiping out pay growth and reducing households’ real post-tax incomes by 2% - the biggest annual drop on record.