U.K. recovery expected to increase inflation above 3% by end of year, says bank
The Bank of England anticipates Britain’s economic recuperation to send a 3% rise in inflation by the end of year before falling back in 2022 as post-Covid economic growth drops.
Policymakers on Threadneedle Street’s monetary policy committee (MPC) said the Bank’s base rate should stay at 0.1% pending economic outlook certainty.
The committee’s June report forecasted inflation to hit 3% or more for a temporary period. A meeting in May reported a 2.5% increase by the end of the year.
Economic growth in the second quarter was expected to be about 1.5% higher than what was initially expected but the full-year forecast at 7.25% remains, the Bank said.
According to the committee, the factors influencing the higher estimate for GDP in Q2 were a faster vaccination rate, increased consumer confidence, and a strong housing market.