Inflation close to ‘peak’ – Bank of England
The Bank of England has said inflation is close to peaking as it froze interest rates yesterday after the first hike for a decade last month.
But minutes of the latest Bank of England monetary policy committee (MPC) meeting showed it expects a dip in economic growth in the final quarter of 2017 to “somewhat below” the 0.4 per cent expansion seen in Q3.
Policymakers including the Bank’s governor Mark Carney said inflation should start to fall after touching a near-six year high of 3.1 per cent in November.
“The MPC continued to judge that inflation was likely to be close to its peak and would decline towards the 2 per cent target in the medium term,” the minutes said.
The Bank added that it also still believes pay growth – which has lagged behind inflation for seven successive months – would start to rise next year, but stressed “uncertainties” around this remained.
The MPC also said the recent progress made in the government’s Brexit negotiations, which allowed talks to move on to the issue of trade, would “reduce the likelihood of a disorderly exit and was likely to support household and corporate confidence”.
Sterling was nearly flat after the interest rate decision was announced, trading slightly higher against the dollar at $1.34 and at €1.134 versus the euro.
The decision comes after the Bank of England voted 7-2 to increase rates in November – the first rise since July 2007 – as it sought to cool surging inflation. 0 Mark Carney believes pay growth will start to rise