The Bank of England (BoE) warns inflation is set to "rise sharply" in the near term and there is nothing the Monetary Policy Committee (MPC) can do about it.
In a speech to the Institute of Economic Affairs today, BoE deputy governor Rachel Lomax says the outlook for the UK economy in 2008 and beyond has “changed dramatically”. Lomax believes cost pressures have not yet fed through fully to consumer prices, with higher utility bills at the forefront. “There is essentially nothing the MPC can do about this immediate impact on the inflation rate,” Lomax says. “The MPC’s remit in setting interest rates is clear – to keep inflation at 2%. But we have discretion to decide how fast to return inflation to target, if it is thrown off course by a s...
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