KPMG comments on today’s interest rate decision
“No easy choices for the Bank of England as economic outlook deteriorates” says Yael Selfin, Chief Economist at KPMG UK.
“No easy choices for the Bank of England as economic outlook deteriorates”
“A potential new spike in inflation when the Energy Price Guarantee ends in April, which has not been fully factored into the Bank’s outlook currently, could put pressure on the MPC to raise rates above the neutral level more quickly in order to rein in inflation expectations.
“At the same time, the outlook is riddled by the evolution of energy prices, while the risk of a significant fall in house prices looms in the background. An expected consumer-led recession could see the UK economy shrink by over 2% by the end of next year, easing much of the ongoing inflationary pressures.
“The Bank’s decision to begin selling short-dated bonds this week underlines its determination to unwind the QE programme in a timely fashion.”
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