Inflation complicates next month’s rate decision
While the economy started strongly this year, Wednesday saw another example of a surprise in the wrong direction.
The economy slowed down again in May and now Inflation accelerated faster than expected. Until autumn, the UK Bank is expected to remain well above the target level.
For consumers hanging from a new turntable at higher prices and food prices, the new number is less surprise, the approved of ordinary daily challenges.
The leap in inflation, which is important for some people, complicates the bank’s ratio cutting plan.
Investors are nailed because it will fall again from 4.25%in August.
Now there is definitely a sense of warning.
Economist Andrew, an old ratio determinant in the bank, even said that the interruption of interest rates next month would be “irresponsible”.
In August, the interruption and the expectations of someone else will continue later on the year.
However, the Bank will have to explain why this increase in inflation is beyond this year’s 2% target for the expected back.
This will mean the return of old questions as to whether the UK is tending to inflation more than other countries due to increased wage and tax costs, for example, for example.
A weakening labor market is another part of negotiations. The latest employment figures will be published on Thursday.
As expected, if they show a continuous decrease in empty positions, this strengthens the argument of continuing with a deduction at proportions. Bloomberg estimates the unemployment rate of 4.9% from 4.6% reported last month.
However, as always, it is important to keep all the numbers in perspective.
True, other major economies did not see a similar leap in inflation. The latest inflation rate of the euro zone is only 2%. However, inflation is not close to the highest levels of the energy crisis and in autumn, energy prices will decrease as they decrease.
Growth is absolutely slowing down, but we are not in stagnation, and the latest activity figures propose improvement in some sectors.
