Connect with us

Hi, what are you looking for?

Editor’s Pick

Bank deputy expects UK inflation ‘comfortably’ to exceed 5% by spring

The Bank of England’s monetary policy chief has said inflation is likely to soar “comfortably” above 5% next spring when the energy regulator Ofgem raises a price cap affecting millions of households.

Record high levels of vacancies are also likely to persist for longer than previously expected as the jobs market adjusts to changes in the economy brought on by the pandemic, said Ben Broadbent, the central bank’s deputy governor with responsibility for monetary policy.

The uncertainty surrounding the impact of rising wage demands by workers seeking to protect themselves against falling living standards meant that he was continuing to watch for signs of a wage/price spiral.

“If wage earners’ expectations of future inflation rise in response, or if they seek compensation for the rises in the costs of living that have already occurred, wages could also accelerate further, even without any additional decline in unemployment,” Broadbent said.

Speaking to Leeds University Business School, he said inflation was on course to increase until at least April next year, when the price cap is due to be raised. “The aggregate rate of inflation is likely to rise further over the next few months and the chances are that it will comfortably exceed 5% when the Ofgem cap on retail energy prices is next adjusted,” he said.

He said the recent jump in inflation for goods, especially cars, driven partly by a global supply chain squeeze, was likely to fade and in some cases reverse, before a Bank rate rise would have an impact.

He said: “I still think it’s more likely than not – looking a couple of years ahead as we should – that these pressures on traded goods prices are more likely to subside than intensify.”

In the only reference to the newly identified coronavirus variant in his speech, Broadbent added: “Obviously the new Omicron variant might interrupt that process, depending on the effectiveness of existing vaccines against it and the severity of its health effects. Those we don’t yet know.”

Broadbent was one of the seven members of the Bank’s nine-strong monetary policy committee (MPC) to wrongfoot financial markets by voting to keep interest rates on hold last month.

Signals from the governor, Andrew Bailey, and the MPC members Michael Saunders and Sir Dave Ramsden convinced investors that the central bank was poised to tighten policy.

Ahead of a meeting on 16 December, investors are pricing less than a 50% chance on the Bank of England raising rates from 0.1% to 0.25%, mainly due to the emergence of the Omicron variant and uncertainty about how long energy prices will remain high.

Last week Saunders hinted that he would vote to maintain the base rate at 0.1%, when he said: “There could be particular advantages in waiting to see more evidence on its possible effects on public health outcomes and hence on the economy.”

Brian Hilliard, an economist at Société Générale, said: “If even the most hawkish member of the MPC is signalling that there might be some value to waiting to see how serious the emergence of Omicron turns out to be then we should expect the other members to have similar concerns.”

Read more:
Bank deputy expects UK inflation ‘comfortably’ to exceed 5% by spring

Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

Latest

News

SAM WORTHINGTON in Avatar: The Way of Water LONDON — Filmmaker James Cameron is taking audiences back to his visually mesmerizing world of Pandora,...

News

IN a fictional Japanese village called Kuge, a newly hired police officer Daigo Agawa (played by Yuya Yagira) arrives in town a broken man....

News

LONDON – Britain’s royal family will be braced for renewed criticism from Prince Harry and his wife Meghan on Thursday when a Netflix documentary...

News

1 of 8 Christmas at Alabang Town Center ALABANG Town Center’s Christmas Emporium takes centerstage at the Town Plaza, and includes a full-scale Tower...

News

L FILIPE C SOUSA-UNSPLASH THE Department of Transportation (DoTr) is engaging the Asian Development Bank (ADB) for technical support in opening up the Ninoy...

News

1 of 6 Quarentados, Save the Children offer virtual caroling THE VOCAL group Quarentados partners with Save the Children Philippines for “Namamasko Po,” virtual...

You May Also Like

News

BW FILE PHOTO GROSS BORROWINGS by the National Government reached P2.6 trillion as of end-September as it continued to raise funds to respond to...

News

REUTERS By Luz Wendy T. Noble, Reporter The country’s foreign exchange buffers slightly increased as of end-October as the value of the central bank’s...

News

KARASOLAR.COM TENA, Ecuador — Ecuador’s rainforest Achuar people say their ancestors long dreamed of a “fire canoe” or “electric fish” that would let them...

News

COVID-19 has had a significant impact on the mental health of Filipinos across different groups all over the archipelago. From frontline workers, parents balancing...

Disclaimer: Respect Investment.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2022 Respect Investment. All Rights Reserved.