Ramsden also said the UK economy could return to pre-pandemic levels this quarter
According to the Lieutenant Governor of the Bank of England, inflation could reach by the end of 2021.
In a speech on the UK economy last night, sir David Ramsden said the recovery could remain unbalanced and lead to inflation well above the BOE target level 2%.
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This comes shortly after data showed that UK inflation had skyrocketed to 2.5% in June.
“I wouldn’t be surprised that the overall inflation rate could rise to 4% later this year,” Ramsden said.
“Since publishing the changes in the balance between forecasts and risks in May, we have decided to consider that the tightening will be met faster than I had previously expected, based on the rapid pace of development. I can imagine it,” he added.
The Bank of England governor also said the UK economy could return to pre-pandemic levels this quarter. This was partly dependent on low interest rates and fiscal stimulus packages, he added.
This is faster than previous expectations for the UK economy during the last three months of the year.
“Since publishing the changes in the balance between forecasts and risks in May, we consider the tightness to be met slightly earlier than I had previously expected, based on the rapid pace of development. You can imagine it,” Ramsden said.
“It reflects my current assessment that balance is heavier on more inflation than my inflation scenario,” he added.
