Oil price volatility key to MPC decision - BDO

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The volatility and uncertainty surrounding future oil prices may cause the Monetary Policy Committee to stay its hand in raising interest rates for a second month in a row, says BDO Stoy Hayward.

However, the accountancy and investment services firm adds it will be a close-run vote because of rising inflationary pressures stoked by current high oil price levels. The problem is that while high oil prices stoke inflation, they could also lead to slower economic growth, which would undermine the argument for any additional interest rate increases. Still, there is no evidence rates increases so far have done anything to stem business optimism, economic output or mortgage lending, BDO says. The latest BDO inflation index figures imply inflation according to the consumer price in...

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