The Fed is stealing the spotlight but let's not forget that the BOE is another major central bank that will be announcing its policy decision this week. In case you missed their previous decision in March:
In some sense, the lack of firm conviction in tightening more aggressively has contributed to the pound's recent demise (alongside a surging US dollar) with GBP/USD having sunk from 1.3200 all the way to test 1.2500 in the past few sessions.
At this stage, the BOE needs to hike the bank rate by another 25 bps to 1.00% purely out of credibility. As much as policymakers are seemingly hesitant to commit to much more or be even more aggressive, they can't ignore the sort of ideals that they have vouched for to begin this tightening cycle.
The BOE was one of the early adopters in justifying that rate hikes are needed to combat inflation and since then, there hasn't been much let up in price pressures to dissuade them of that view. Instead, it is the economy and the cost-of-living crisis that is putting them between a rock and a hard place now, considering that rate hikes won't do much to resolve the inflation issue.
It will be interesting to see how they balance that out and if they will be one of the first central banks to advocate for rate hikes and then back away as quickly as you can say 'transitory'. I mean that may very well be the case for higher rates at the end of the day. Talk about irony.