Bank of England says inflation likely to have peaked amid split over interest

Bank: inflation likely to have peaked

The Bank of England believes inflation has probably peaked, in the UK and other advanced economies too.

In a summary of today’s decision, the Bank says:

Global consumer price inflation remains high, although it is likely to have peaked across many advanced economies, including in the United Kingdom.

Wholesale gas prices have fallen recently and global supply chain disruption appears to have eased amid a slowing in global demand. Many central banks have continued to tighten monetary policy, although market pricing indicates reductions in policy rates further ahead.

The message from the Bank of England today is that things are going to be bad, but not as bad as previously feared, our economics editor Larry Elliott explains.


He writes:



Interest rates may be near their peak. Inflation will be close to zero in a couple of years. Recent shocks have damaged the economy’s supply potential.


Those were the main messages from the Bank of England as it raised interest rates for a 10th successive time.


Threadneedle Street is still expecting a recession but a mild one by UK standards, and less severe than it was predicting in the immediate aftermath of Liz Truss’s brief period as prime minister.



Here’s Larry’s analysis:

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The Bank of England has blamed the inflationary impact of higher than expected wage rises for an increase in interest rates from 3.5% to 4%, my colleague Phillip Inman writes.


The move, announced at noon today, piles more pressure on mortgage payers and businesses struggling to pay off their loans, he points out.


Amid calls from unions for higher wages to protect against the worst falls in living standards for 100 years, a majority of the Bank’s monetary policy committee (MPC) said the 0.5 percentage point rise was needed after a jump in private sector wages above the central bank’s previous forecasts.


Marking its 10th consecutive rate increase, the Bank said the economy would enter a shorter and shallower recession than it predicted last year – with output falling by 1% from peak to trough compared with a 3% drop it said in November.


Bank staff now expected GDP to have grown by 0.1% in the final quarter of 2022, stronger than predicted in November. That would mean the UK did not enter a technical recession in 2022, as previously thought after the economy shank by 0.3% in the third quarter.


The UK economy is forecast to shrink in each quarter of 2023 and the first quarter of 2024 before staging a modest recovery.


The Bank said the hit to trade from Brexit was being felt sooner than previously…

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