BOE Seen Holding Rates This Year Despite Expected Rise in August Inflation
Dow Jones
Sep 09
0932 GMT - U.K. inflation is expected to rise to 3.3% in August, from 2.9% a month prior, RSM UK's Thomas Pugh says in a note. Still, this is unlikely to prompt a rate hike by the Bank of England, with price growth driven largely by higher motor fuel prices and airfares, he says. Inflation will likely keep rising, peaking close to 4% in 2027. "For Chancellor Healey, it will mean balancing an even bigger hit to his fiscal headroom against demands to do more on the cost of living," Pugh says. This will also keep the BOE on edge. "But the weaker labour market should limit any second-round effects, giving the [Monetary Policy Committee] enough room to stay on hold this year," he says.
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