UK inflation expected to reach double digits, Bank of England say may reach 11% later this year
UK inflation probably reached a new four-decade high above 9% in May, underscoring the challenge for the Bank of England as it threatens faster interest-rate increases in response.
A week after surging US consumer prices prompted an accelerated 75 basis-point hike from the Federal Reserve amid spasms in global financial markets, the British data will offer investors another chance to ask if the reaction of policy makers is adequate.
While the median prediction of economists for inflation on Wednesday anticipates an increase to 9.1%, one estimate -- by Natixis SA -- suggests an outcome of 10%. The BOE reckons the peak later this year will be “slightly above” 11%.
That forecast accompanied the decision last week of officials led by Governor Andrew Bailey to raise the rate for a fifth straight meeting, by a quarter point, and signal that a larger move could transpire if needed to bring inflation under control.
The BOE also warned the economy may be suffering a contraction in the second quarter, analysis that reports this week could help validate. Economists’ forecasts show retail sales probably dropped 0.7% in May, while surveys of purchasing managers are seen revealing further slowing in both manufacturing and services.
Investors will also scrutinize the reaction of policy makers to such data, with at least seven such appearances planned this week including two by Chief Economist Huw Pill. The worsening economic news will feed into the political debate on whether Prime Minister Boris Johnson’s government is doing enough to ease the cost-of-living crisis.
https://www.bloomberg.com/news/arti...on-rate-with-double-digits-eco-week#xj4y7vzkg
UK inflation probably reached a new four-decade high above 9% in May, underscoring the challenge for the Bank of England as it threatens faster interest-rate increases in response.
A week after surging US consumer prices prompted an accelerated 75 basis-point hike from the Federal Reserve amid spasms in global financial markets, the British data will offer investors another chance to ask if the reaction of policy makers is adequate.
While the median prediction of economists for inflation on Wednesday anticipates an increase to 9.1%, one estimate -- by Natixis SA -- suggests an outcome of 10%. The BOE reckons the peak later this year will be “slightly above” 11%.
That forecast accompanied the decision last week of officials led by Governor Andrew Bailey to raise the rate for a fifth straight meeting, by a quarter point, and signal that a larger move could transpire if needed to bring inflation under control.
The BOE also warned the economy may be suffering a contraction in the second quarter, analysis that reports this week could help validate. Economists’ forecasts show retail sales probably dropped 0.7% in May, while surveys of purchasing managers are seen revealing further slowing in both manufacturing and services.
Investors will also scrutinize the reaction of policy makers to such data, with at least seven such appearances planned this week including two by Chief Economist Huw Pill. The worsening economic news will feed into the political debate on whether Prime Minister Boris Johnson’s government is doing enough to ease the cost-of-living crisis.
https://www.bloomberg.com/news/arti...on-rate-with-double-digits-eco-week#xj4y7vzkg
