Bank of England raises bank rate to 4.5% amid inflation concerns

Despite the elevated inflation rate, the MPC expects CPI inflation to decline, with projections showing a decrease to a little above 1 per cent at the two and three-year horizons. However, uncertainties remain around the pace at which inflation will return to the 2 per cent target.

The UK economy has seen a brighter outlook with stronger global growth, lower energy prices, fiscal support from the Spring Budget, and a tight labour market potentially leading to lower precautionary saving by households. The unemployment rate is projected to stay below 4 per cent until the end of 2024.

The MPC said it will continue to monitor inflationary pressures, including labour market conditions, wage growth, and services price inflation. “If persistent pressures are identified, further tightening in monetary policy may be required to return inflation to the 2 per cent target sustainably,” it added.

ALCHEMPro News Desk (RKS)