The MPC is battling to steer the UK between runaway inflation and tipping the economy into recession.
The Bank of England just raised interest rates from 0.75% to 1% in an attempt to tackle soaring inflation which has been exacerbated by Russia’s war in Ukraine. With a new rise in home energy bills expected in October, it forecast inflation would creep above 10% this year, the highest level since 1982...
There had been speculation before the meeting that one or two MPC members might opt for a 0.5% increase. But the vote was in fact split 6:3 to raise the Bank Rate by 0.25% with three dissenters favouring a greater rise. The MPC doubled down on its March narrative, setting out the potential for a marked slowdown in activity over the coming months and dramatically cutting its growth forecasts, as the negative impacts from the higher cost of living weighs on household real income.
The question to ask yourself is, what do your risks look like with your customers and suppliers experiencing lower turnover and lower profit margins? Are you modelling and planning for that?..