According to the British entity, The committee – whose objective is to keep inflation around 2% – considered that a forceful measure was “justified” due to energy prices.
“Overall, a faster pace of policy tightening at this meeting would help bring inflation back to the 2% target sustainably over the medium term, and reduce the risks of a longer and more costly tightening cycle.” forward,” added the Bank.
The entity stressed that wholesale gas prices have practically doubled since May, due to Russia’s decision to restrict gas supply in Europe and the risk of further restrictions. “As this feeds through to retail energy prices, it will exacerbate the decline in real UK household income and push inflation further higher,” he adds.
Likewise, andhe bank forecasts a greater increase in inflation, which may rise to 13% in the last quarter of the year and remain at high levels during 2023, although it is expected to trend downward afterwards.
The entity projects that the United Kingdom enters a long recession – which may last more than a year – from the last quarter, while it estimates that real household income will fall rapidly this year and in 2023.
Source: Ambito
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