UK Inflation Highest Since 2012

Gladys Abbott
October 18, 2017

Dave Ramsden, the new deputy governor of the Bank of England said that he was not in support of voting for an interest rate hike, calling into question when the BoE will implement its first interest rate hike in over ten years.

'Despite continued robust growth in employment there is no sign of second-round effects on to wages from higher recent inflation, ' he told MPs.

BOE deputy Governor Dave Ramsden was answering United Kingdom lawmaker's questions in a parliamentary committee, alongside new external BOE policy setting member, Silvana Tenreyro. Mark Carney, the BoE governor, has stated his opinion that an interest rate hike is forthcoming.

"For some time our expectation has been that inflation would rise above 3 percent, with the annual rate of CPI likely to hit a peak of 3.2 percent in next month's release for October", added Lloyds Bank.

Silvana Tenreyro, the LSE professor who was appointed in June to replace known MPC "hawk" Kristin Forbes, said that as spare capacity in the economy is eroded, she will be minded to vote for tighter policy.

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The BoE surprised investors last month when it said most of its rate-setters expected to increase borrowing costs "in the coming months", even though Britain's economy is growing more slowly than other European economies and uncertainties about Brexit are mounting. She said she might vote for a rate rise as "we are approaching a tipping point" but said she was watching the economic data closely as "rasising rates too soon would be a costly mistake".

Speaking to United Kingdom lawmakers in a second Parliamentary questioning session Tuesday, BOE Governor Mark Carney retained his stance on inflation. Noting that country has not yet seen summit level of snuff, Carney said bank's primary mission was to realize inflation target, which is 2 percent.

Last month, Threadneedle Street officials suggested the Bank could hike interest rates, for the first time in a decade, at its next meeting on 2 November.

In UK, as of September, consumer price index has increased by 3 per cent, seeing its highest level since April 2012 year-on-year basis.

However, the British pound remained lower against the dollar despite confirmation of Carney's view on inflation.

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