'Was the Bank of England right to raise inflation rates again?' Oxford Economies's senior advisor Michael Saunders thinks so, here's why 👇 📺 Sky 501, Virgin 602, Freeview 233 and YouTube
Inflation should 'fall sharply' over coming months, Bank of England says
"On the other hand, inflation could surprise to the upside, particularly if wage rises remain elevated, suggesting further rate rises.""The MPC has again been driven to raise rates by stubbornly high inflation, ongoing strength in wage growth and better-than-expected activity," she said. We've been reporting on how savers are being urged to make sure they shop around for the best deals on their bank accounts - especially now the Base rate has risen again.
But that is the paradox facing the economy at the moment. On the one hand, the outlook for the country as a whole is considerably rosier than it was only a few months ago. If you follow these forecasts you may recall that late last year the Bank said that the UK economy might well face the longest recession in modern history.
Yet for those households who do not benefit from these financial cushions, life is tough - and getting tougher. Only around a third of the eventual"pain" of higher interest rates have yet been felt, because most mortgage payers have yet to refix their loans onto higher rates. But that will happen for millions in the coming months.
The Bank's Monetary Policy Committee said there would be no recession this year, upgrading its economic growth forecasts by more than in any of its previous reports. It is a dramatic change from only a few months ago, when it was predicting the longest-lived recession in modern British history. However, it still only results in relatively lacklustre economic growth this year and next.
The vote to change interest rates was split, with seven members voting for the quarter percentage point increase but two MPC members, Silvana Tenreyro and Swati Dhingra, voting to leave them unchanged.
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