Economists polled by Reuters last week were unanimous that the BoE would raise rates to 4.75%, their highest since 2008, from 4.5%. But after inflation held at 8.7% in May, financial markets priced in a nearly 50% chance that the BoE would opt for a bigger move and raise rates by half a percentage point. "The UK has a uniquely bad inflation problem," Krishna Guha, a vice chairman at U.S. investment banking advisory firm Evercore, said. Core inflation - which strips out more volatile prices to show an underlying trend - rose to a 31-year high in May. "Unfortunately, the Bank of England is in a situation where they will have to hike until something breaks," he said.

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Persons: BoE, Tomasz Wieladek, Rowe Price, Krishna Guha, Evercore, Rishi Sunak, Andrew Bailey, Megan Greene, Wieladek, David Milliken, Kirsten Donovan Organizations: Bank of England, Reuters, U.S . Federal, European Central Bank, Sky News, MPC, Nomura, Thomson Locations: Ukraine, United States