BoE expected to raise rates to 5.25 from 5 on Aug. 3
Repeat of June39;s halfpoint rate rise seen as possible
UK inflation of 7.9 remains the highest in the G7
Markets and economists see rates hitting 5.75 this year

LONDON, July 28 Reuters The Bank of England looks likely to raise rates by a quarterpoint to 5.25 on Aug. 3, though economists and markets see a risk of a repeat of June39;s surprise halfpoint hike as inflation remains hotter than in other big economies.

Both the U.S. Federal Reserve and the European Central Bank increased interest rates by a quarter of a percentage point this week, but unlike the BoE, markets think they are at or near the end of their ratetightening cycle.

In contrast, bets on where BoE rates will peak have swung sharply since the central bank39;s last rate move on June 22 as investors try to work out if Britain has a deeprooted inflation problem, or if rapid price growth is on the cusp of the sharp slowdown seen elsewhere.

Where rates go after August will depend on the extent to which secondround effects persist, said Andrew Goodwin, chief UK economist at Oxford Economics, referring to the knockon impact on wages and prices of last year39;s surge in energy costs.

Expectations for peak BoE rates reached 6.5 on July 11 after data showed record wage growth. But they fell back after a biggerthanexpected decline in consumer price inflation. Investors are now split fairly evenly between a peak of 5.75 or 6 late this year or early in…