The British pound rose in the middle of the trading week, despite worse-than-expected inflation. The UK economy continues to face tremendous pressure from rampant price inflation, prompting many market observers to price in more rate cuts to bring down these higher broad-based price issues. Can the UK expect to see inflation come down as quickly as the US?

According to the Office of National Statistics (ONS), the annual inflation rate was unchanged at 8.7% in May, higher than economists’ expectations of 8.4%. The monthly inflation rate rose 0.7%, down from 1.2% in April and higher than the market forecast of 0.5%.

The core inflation rate, which removes the volatile food and energy components, unexpectedly shot up to 7.1% year-over-year, up from 6.8%. This was also higher than the market projection of 6.8%. The core inflation rate jumped 0.8%, down from 1.3% and higher than the consensus estimate of 0.6%.

The abysmal numbers have experts anticipating that clamping down on inflation will require higher interest rates and a recession.

Investors already expect that the Bank of England (BoE) will choose to pull the trigger on a larger rate hike.

“There is a strong argument for a 50-basis point hike at tomorrow’s Bank of England’s meeting,” Charles White Thomson, CEO at Saxo UK, told Bloomberg. “The bank needs to take the initiative quickly. The risk for further policy failure is real, and the stakes are getting increasingly high.”

Despite initial estimates of the worst recession in UK history, the government reversed this call amid better-than-expected GDP data and said that a modest downturn was the likeliest event.

However, if inflation does not decelerate, policymakers might be forced to trigger a fierce recession to ensure inflation is vanquished.

The UK bond market was red across the board, with the benchmark ten-year yield down 0.3 basis points to 4.401%. The three-month bill was unchanged at 4.67%, while the 30-year bond shed half a basis point to 4.506%.

The GBP/USD currency pair rose 0.07% to 1.2774, from an opening of 1.2765, at 19:47 GMT on Wednesday. The GBP/JPY advanced 0.33% to 181.17, from an opening of 180.58.