MPC says inflation is likely to reach 4% towards the end of 2021
The Bank of England confirmed Thursday that “conservative monetary policy tightening” could be required over the next two years to minimize the potential impact of high inflation.
The Monetary Policy Committee (MPC) agreed that the conditions are met to examine the potential for hiking interest rates at its latest meeting, so inflation could be approaching 4% at the end of 2021 He said it is highly proficiency.
– Advertising –
However, MPCs are not forced to act at speed by the spread of their imagination.
The committee voted unanimously to maintain interest rates at his historic low of 0.1%, but all but one of the eight members will maintain a £150 billion government debt purchasing programme. I voted for.
The Bank of England has referenced the efficiency of vaccine rollouts as it changes the UK economy’s outlook as restrictions on many key industries have been lifted.
Consumer spending has since bounced back from April, and along with production, the need for stimulation is less severe.
Ed Monk, Associate Director of Personal Investment at Fidelity International, believes the Bank of England is changing mood.
“This has not yet been translated into a change in monetary policy, with rate setters voting 7-1 to maintain fees and asset purchases at current levels, but the minutes from the August meeting are , reveals that some members believe that some harsh conditions now have. Monk said.
“The labor market remains important, with recent wage increases and unemployment data being stronger than expected, indicating a widespread increase in demand that may not retreat as the economy recovers from the pandemic. .”
“While bank rates are likely to remain at the current 0.1% this year, there is some hope for future gains, and the market will handle a faster return to more normal monetary policy It may be necessary. Banks may quickly need a balance between the need to control inflation and the possibility of instability created by imposing higher borrowing costs, especially the younger generations. has never experienced high inflation and rise rates and has not been used to feel the impact of increased mortgage payments,” Monk said.
