Bank warns of inflation rising to 11% after split vote to lift rate, for fifth time in a row, by 0.25 points
has raised interest rates for a fifth time in succession to tackle an inflation rate that is heading towards 11% amid soaring household energy bills.
In a downbeat assessment as the central bank attempts to navigate a narrow path between flatlining economic growth and surging inflation, Threadneedle Street now expects the economy to shrink in the second quarter while a further rise in household energy bills is expected to push inflation above 11% in October.
“The committee would be particularly alert to indications of more persistent inflationary pressures, and would, if necessary, act forcefully in response,” it said. Highlighting the growing risk of a recession, the Bank sharply downgraded its growth forecast for the second quarter of the year, cutting its estimate from a 0.1% rise in GDP during the three months to the end of June to a 0.3% decline.Official figures showed thatafter a fall in March. Threadneedle Street said other “temporary factors”, including the Queen’s platinum jubilee bank holiday, were also likely to have weighed on growth.
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