Last week the Bank of England (BoE) raised interest rates to 1.25% and warned inflation will exceed 11% this coming autumn...
The UK’s central bank lifted its benchmark rate to 1.25%, from 1%, the fifth rise in as many meetings. Three policymakers wanted a bigger rise to 1.5% but were outvoted by the other six. Interestingly, it was all three of the external members of the board that voted for the higher rise...
Other central banks around the world are taking more forceful measures to combat soaring inflation and are introducing steeper interest rate hikes. The BoE has been accused of being too timid after only raising interest rates by a quarter of a point, despite the UK’s intensifying cost of living crisis and forecasted higher inflation.
Roger Bootle wrote in the Telegraph that the BoE's credibility is now severely compromised and that assessing the economy is like shooting at a constantly moving target... and the Bank keeps missing.
The Bank of England had also previously estimated that consumer price inflation would hit 10%– far over its 2% target. This new forecast of 11% shows that households face even more pain, with real wages already lagging inflation.