Investors and economists expect Bank of England to raise its key rate a half point to 4 per cent on Thursday via IrishTimesBiz
The survey is expected to show that employers are planning further increases in pay settlements this year, while the supply review is likely to point to a tighter labour market than thought. Those factors are helping push up prices, underpinning the need for rate hikes – even though the economy is weakening.
While the pace of those increases is well beyond the BoE’s comfort level, it’s still lagging inflation. The consumer prices index rose 10.5 per cent in December, down from a peak of 11.1 per cent two months before but still more than five times the BoE’s 2 per cent target rate. Alongside the vote, the central bank will publish its latest forecasts. They will show that this year’s recession will be shallower than previously projected and inflation will fall more rapidly, said Saunders.
Rob Wood, UK economist at Bank of America, expects the review of the UK’s supply capacity to come to equally awkward conclusions.
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