Uncertainty prompted the Bank’s Monetary Policy Committee to raise interest rates last week
The Bank is trying to get inflation back to its 2 per cent target rate and raised interest rates for the 10th time in a row last week Inflation is almost “guaranteed” to come down rapidly this year unless there is a new, unexpected global event, the Governor of the Bank of England has told MPs.
The Bank said it is staying “watchful” and emphasised that there remains “substantial remaining uncertainty” over domestic inflation.The Bank is trying to get inflation back to its 2 per cent target rate and raised interest rates for the 10th time in a row last week. The rise took the rate to its highest since 2008 –Professor Silvana Tenreyro, an MPC external member, told the Treasury Select Committee that declining inflation is all but guaranteed.
“We have tightened policy significantly over the past year and that’s going to have a large impact on demand, and will be the mechanism that brings inflation down to below target.”Professor Tenreyro said that only about 20 per cent of the effect from higher borrowing costs had come through and said rates would need to be cut later this year as the UK economy felt the full impact. “The rest is still to come. In my view, rates are too high right now,” she said.
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