Bank of America economist Robert Wood said: “The UK will require considerable further monetary tightening.
“It has the worst of both worlds: high and persistent headline inflation due to energy prices and a very tight labour market due to rising long-term sickness.”
ING has argued that weakening economic data will tempt the Bank to opt for just a 0.5 percentage point rise, while Capital Economics expects a 1 percentage point increase.
Markets do not expect an increase as high as they were predicting last month, because the Chancellor Jeremy Hunt has reversed the bulk of his predecessor Kwasi Kwarteng’s mini-Budget.
There were fears that the scrapped tax rises would fuel inflation further, forcing the Bank into more drastic action on interest rates.
However, investors are still betting on the base rate peaking at over 4.5pc.
The Bank will also reveal new economic forecasts, with rate-setters predicting an inflationary peak of just under 11pc at its last meeting.
Nationwide’s best case scenario is that house prices “slowly increase” next year, Mr Rhodes said.
He added that the best and worst-case scenarios “are the two extremes which are tail probabilities”, adding that its central forecast was for prices to fall between 8-10pc in 2023.
Rival lenders Lloyds and NatWest last week said they expected house prices to drop between 7-8pc next year, as higher mortgage costs and squeezed household finances threaten to tip the market into a downturn.
In the US, Mr Powell hinted at more gentle rate rises soon as higher borrowing costs take effect.
He said: “The question of when to moderate the pace of increases is now much less important than the question of how high to raise rates.
“At some point, it will become appropriate to slow the pace of increases. That time is coming and it may come as soon as the next meeting or the next one after that.
“We will stay the course until the job is done.”
