May 30, 2024

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Tom Nicholson/Reuters - 31/10/2021

UK inflation will reach 7.5% when energy increases

Annual inflation in the UK It should be 7.25% in April this year due to pressure on energy prices, Catherine Mann, a member of the Monetary Policy Committee of the Bank of England (BoE, its abbreviation in English), told the Cleveland Federal Reserve on Tuesday. Event.

For team member Michael Sanders, this effect of energy prices on inflation will be temporary. “It’s going to raise inflation – and slow down real wage growth – for a while.

Therefore, according to him, when the temporary effect of energy prices is at its peak, it does not make sense to tighten monetary policy too much, aiming to reverse the inflation target of 2% per annum.

“This does not mean that the monetary policy committee has abandoned its commitment to low inflation, but that monetary policy can do nothing with the temporary effects of inflation,” he pointed out. “The big picture is that energy prices are causing high inflation, the economy is in substantial demand and inflation expectations are not anchored as much as they would like.” , He added.

At the February meeting, Sanders said he was in favor of a 0.5 point interest rate hike. However he acknowledged that their numbers were not enough to defeat President Conte’s government.

According to him, the team has the tools to bring inflation back to the 2% target.

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