When will interest rates start to go down?

The Bank of England has now raised interest rates 12 times in a row to a near 15-year high, but its latest outlook suggests the possibility of at least one further rate rise next month.

The new forecast from the Bank outlines the foothills of economic recovery starting this summer - the economy not only avoids a recession, but now does not shrink at all from here.

But on the downside, inflation hangs around like a bad smell well into next year, falling notably more slowly than expected.

Underpinning all of this is the collapse in energy prices from their Ukraine war highs and the investments made across Europe in storing gas supplies. This outlook is very sensitive to any changes in the energy market this winter.

The economy is now forecast to make up the ground lost since the pandemic by the end of this year, rather than 2025. It is a significant upgrade from the very weak forecasts made last year.

Even as it is, inflation is expected to be above 5% at the end of the year, and 3-4% in June 2024. This means that the government's target of halving inflation is only just about on target, a 50:50 chance.

• Food costs mean higher prices for longer, says Bank

• What the latest interest rate rise means for you

But the Bank of England's actual inflation target of 2% will continue to be missed for the rest of this parliament. The Bank primarily blames this on Europe-wide food price inflation, which in turn is a knock-on effect from high energy prices.

The Bank also thinks that less than a third of the impact of the existing rate rises has fed through to consumers, partly because so many householders are on fixed-rate mortgages.

Banking sources point out that after so many rate rises, in the past there would have been far more repossessions. But they have better data on who will struggle, and are far less likely to use this tool. It raises important questions about the potency and speed of interest rate rises as a tool.

So the Bank is keeping the door open for another rise next month. If they go for a 13th rise they will need their luck in a tricky balancing act.

As growth finally returns, after three shocks, questions remain about sticky British inflation.