Bank of England rate increase and inflation warning – review of SFS figures
At its meeting ending on 4 May 2022, the MPC voted by a majority of 6-3 to increase Bank Rate by 0.25 percentage points, to 1%. Those members in the minority preferred to increase Bank Rate by 0.5 percentage points, to 1.25%. Several economists have speculated that continuing to increase interest rates will not work where the underlying reasons for rising inflation are not in our control. The press release reflects that the global inflationary pressures have intensified sharply following Russia’s invasion of Ukraine. This has led to a material deterioration in the outlook for world and UK growth. CPI inflation is expected to rise further over the remainder of the year, to just over 9% in 2022 Q2 and averaging slightly over 10% at its peak in 2022 Q4. This all points to having more dynamic mechanism for assessing household affordability when making affordability assessments, which are generally forward looki...
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