The Bank of England has warned that inflation in the UK will increase “quite sharply” later this year due to rising water and energy bills. The Bank indicated its stance after cutting interest rates from 4.75% to 4.5%, lessening the outlook of the government’s economic growth forecast. Inflation – that underlines the pace of price increases – is expected to remain for longer above the Bank’s target for 2% stated earlier. The Bank remains vigilant on trade tariff threats by US President Donald Trump.
Moreover, Bank of England Governor Andrew Bailey said that the Bank is gradually and cautiously reducing further interest rates. Chancellor Rachel Reeves cited the reduction of the interest rate as “good news”. She commented on the fact that, despite the development, the growth rate was still not satisfactory. Conversely, the Bank said that the economy would continue to stagnate despite the Government’s efforts to improve it.
The Bank’s quarterly inflation report found that economic growth has remained flat since March last year, with zero growth in the UK economy between July and September. The Bank currently anticipates a -0.1% economic reduction for the following three months, contrasting its previous estimate of 0.3% growth. The Bank’s revised forecast reflects a slump in the economy that is expected to reach the definition of a recession, which refers to two consecutive 3-month phases of economic contraction.
The latest official growth figures from the UK are scheduled for publishing next Thursday, implying that inflation is anticipated to increase fleetingly to 3.7% later in the year. The Bank expects its growth to decline, but it will take until the latter part of 2027 to fall back to the 2% target, anticipated earlier in the year instead of that time
Read the full article from The BBC here: Read More
