The inflation report for the UK revealed a more moderate pace of price growth than had been anticipated. At the same time, the rise in core inflation to a 31-year high has also boosted expectations that the Bank of England will maintain its current trend of tightening monetary policy.
Compared to October's 41-year high of 11.1%, April's consumer price index hit 8.7%, while the Reuters consensus forecast projected a dip to 8.2%. Earlier this month, the Bank of England predicted that inflation would reach 8.4% in April.
According to analysts, the predicted interest rate hike from 4.50% to 4.75% in June and probably higher in the following months is justified by a more steady rise in prices that has exceeded the expectations of the UK’s central bank.
The next meeting of the Board of Governors of the Bank of England is scheduled to take place on June 22. Following the release of the inflation report for the month of April, investors revised their forecasts, estimating that interest rates will increase by another quarter point, moving them from 83% to 100% in the next month.
It also stands to mention that the central bank is concerned that an increase in inflation may lead to a prolonged change in the requirements for wages and prices. This will merely add to the issues that have already been caused by the outbreak of the Covid-19 pandemic and Brexit.Login in Personal Account