The Bank of England predicted the UK annual inflation rate to continue surging this year as pandemic-hit economies reopen, but kept its record-low interest rate and emergency stimulus intact.
The BoE warned, however, that some “modest tightening” of its monetary policy could be necessary in the future as it forecast inflation soaring to four percent in the final quarter from a near three-year high of 2.5 percent in June.
Following this week’s regular meeting, the BoE left its interest rate at an all-time UK low of 0.1 percent. The BoE said in a statement that “inflation is projected to rise temporarily in the near term, to four percent… owing largely to developments in energy and other goods prices”.The Federal Reserve and European Central Bank have also insisted that high inflation will be temporary, resulting in the pair so far making no changes to their own ultra-low rates and economic support measures.
As the pandemic erupted in March 2020, the BoE slashed its key interest rate to the current record-low level.The bank has created £450 billion under its quantitative easing programme since March last year, when Covid-19 prompted Britain’s first coronavirus lockdown.
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