Arab Press

بالشعب و للشعب
Friday, Aug 22, 2025

Bank of England ramps up inflation forecast again but takes no action to help cool prices

Bank of England ramps up inflation forecast again but takes no action to help cool prices

The Bank cuts its expectations for UK growth and sees a greater risk to inflation from next spring as increased energy costs filter through.
The Bank of England has again ramped up its warnings about rising prices and admitted the economy is not growing as fast as it had expected.

However, it stopped short of taking action in a bid to help cool costs as its monetary policy committee (MPC) kept interest rates on hold and maintained the Bank's £895bn bond-buying support for the post-COVID economic recovery.

The Bank said its staff now expected growth during the current third quarter to come in 1% weaker than estimated just last month amid the deteriorating price boom.

The challenges include extra costs associated with a shortage of workers, global supply chain delays and surging energy prices, including the record rise in wholesale gas costs.

The latter is set to bite household finances in the months to come at a time when government COVID aid, including furlough cash and the Universal Credit uplift, will have been withdrawn.

The Bank has consistently pointed to a central view that the energy spike this year - the main cause of the price problem - would be "transitory".

It has blamed the bill pressures on the consequences of the economy reopening and seen the effects as temporary, despite concerns raised by its then-chief economist Andy Haldane.

The MPC then warned in August that a "modest tightening" of policy may be required to help cool prices as it predicted the consumer prices index (CPI) measure of inflation hitting a 10-year high of 4%.

It is currently at 3.2% following the largest leap on record.

The Bank said on Thursday that it now expected CPI to exceed 4% by the year's end.

The split on the MPC around tapering support grew as a second member, deputy governor Dave Ramsden, joined Michael Saunders in voting for an early end to government bond purchases.

A summary of the meeting read: "Since the August MPC meeting, the pace of recovery of global activity has showed signs of slowing.

"Against a backdrop of robust goods demand and continuing supply constraints, global inflationary pressures have remained strong and there are some signs that cost pressures may prove more persistent."

It added: "The material rise in spot and forward wholesale gas prices since the August Report represents an upside risk to the MPC's inflation projection from April 2022.

"Most other indicators of cost pressures have remained elevated. The Committee's central expectation continues to be that current elevated global cost pressures will prove transitory."

The Bank also said it would be watching carefully the impact of the furlough scheme's demise at the end of the month.

It delivered its verdict hours after a snapshot of private business activity pointed to stagnating economic growth and an acceleration in the pace of price increases - a scenario known as "stagflation".

The IHS Markit/CIPS flash purchasing managers' index survey showed confidence at its weakest since January.

Chris Williamson, IHS Markit's chief business economist, said of the findings: "While there are clear signs that demand is cooling since peaking in the second quarter, the survey also points to business activity being increasingly constrained by shortages of materials and labour, most notably in the manufacturing sector but also in some services firms.

"A lack of staff and components were especially widely cited as causing falls in output within the food, drink and vehicle manufacturing sectors.

"Shortages are meanwhile driving up prices at unprecedented rates as firms pass on higher supplier charges and increases in staff pay."

Commenting on the Bank of England meeting, chief UK economist at Pantheon Macroeconomics, Samuel Tombs, said: "The MPC is waiting until November to provide a clearer steer on the outlook for interest rates, as by then it will be able to make an initial assessment of the wind-down of the furlough scheme and review the latest fiscal plans in the October 27 Budget."
Comments

Oh ya 4 year ago
Central banks of the world can not raise interest rates to slow inflation because countries are so far in debt they could not afford to make the payments on their loans at the higher rate. It will all stop when we hit the Venezuela moment

Newsletter

Related Articles

Arab Press
0:00
0:00
Close
Dogfights in the Skies: Airbus on Track to Overtake Boeing and Claim Aviation Supremacy
Tim Cook Promises an AI Revolution at Apple: "One of the Most Significant Technologies of Our Generation"
Are AI Data Centres the Infrastructure of the Future or the Next Crisis?
Miles Worth Billions: How Airlines Generate Huge Profits
Zelenskyy Returns to White House Flanked by European Allies as Trump Pressures Land-Swap Deal with Putin
Beijing is moving into gold and other assets, diversifying away from the dollar
Trump Backs Putin’s Land-for-Peace Proposal Amid Kyiv’s Rejection
Zelenskyy to Visit Washington after Trump–Putin Summit Yields No Agreement
Iranian Protection Offers Chinese Vehicle Shipments a Cost Advantage over Japanese and Korean Makers
United States Sells Luxury Yacht Amadea, Valued at Approximately $325 Million, in First Sale of a Seized Russian Yacht Since the Invasion of Ukraine
Saudi Arabia accelerates renewables to curb domestic oil use
Cristiano Ronaldo and Georgina Rodríguez announce engagement
Asia-Pacific dominates world’s busiest flight routes, with South Korea’s Jeju–Seoul corridor leading global rankings
Private Welsh island with 19th-century fort listed for sale at over £3 million
Sam Altman challenges Elon Musk with plans for Neuralink rival
Australia to Recognize the State of Palestine at UN Assembly
The Collapse of the Programmer Dream: AI Experts Now the Real High-Earners
Armenia and Azerbaijan to Sign US-Brokered Framework Agreement for Nakhchivan Corridor
British Labour Government Utilizes Counter-Terrorism Tools for Social Media Monitoring Against Legitimate Critics
WhatsApp Deletes 6.8 Million Scam Accounts Amid Rising Global Fraud
Texas Residents Face Water Restrictions While AI Data Centers Consume Millions of Gallons
India Rejects U.S. Tariff Threat, Defends Russian Oil Purchases
United States Establishes Strategic Bitcoin Reserve and Digital Asset Stockpile
Thousands of Private ChatGPT Conversations Accidentally Indexed by Google
China Tightens Mineral Controls, Curtailing Critical Inputs for Western Defence Contractors
JPMorgan and Coinbase Unveil Partnership to Let Chase Cardholders Buy Crypto Directly
British Tourist Dies Following Hair Transplant in Turkey, Police Investigate
WhatsApp Users Targeted in New Scam Involving Account Takeovers
Trump Deploys Nuclear Submarines After Threats from Former Russian President Medvedev
Germany’s Economic Breakdown and the Return of Militarization: From Industrial Collapse to a New Offensive Strategy
Germany Enters Fiscal Crisis as Cabinet Approves €174 Billion in New Debt
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
Iranian President Reportedly Injured During Israeli Strike on Secret Facility
Kurdistan Workers Party Takes Symbolic Step Towards Peace in Northern Iraq
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
AI Raises Alarms Over Long-Term Job Security
Russia Formally Recognizes Taliban Government in Afghanistan
Saudi Arabia Maintains Ties with Iran Despite Israel Conflict
Mediators Edge Closer to Israel-Hamas Ceasefire Agreement
Germany Seeks Taliban Deal to Deport Afghan Migrants
Emirates Airline Expands Market Share with New $20 Million Campaign
Robots Compete in Football Tournament in China Amid Injuries
×