London Daily

Focus on the big picture.
Friday, Jul 25, 2025

Bank of England ramps up inflation forecast again but takes no action to help cool prices

Bank of England ramps up inflation forecast again but takes no action to help cool prices

The Bank cuts its expectations for UK growth and sees a greater risk to inflation from next spring as increased energy costs filter through.
The Bank of England has again ramped up its warnings about rising prices and admitted the economy is not growing as fast as it had expected.

However, it stopped short of taking action in a bid to help cool costs as its monetary policy committee (MPC) kept interest rates on hold and maintained the Bank's £895bn bond-buying support for the post-COVID economic recovery.

The Bank said its staff now expected growth during the current third quarter to come in 1% weaker than estimated just last month amid the deteriorating price boom.

The challenges include extra costs associated with a shortage of workers, global supply chain delays and surging energy prices, including the record rise in wholesale gas costs.

The latter is set to bite household finances in the months to come at a time when government COVID aid, including furlough cash and the Universal Credit uplift, will have been withdrawn.

The Bank has consistently pointed to a central view that the energy spike this year - the main cause of the price problem - would be "transitory".

It has blamed the bill pressures on the consequences of the economy reopening and seen the effects as temporary, despite concerns raised by its then-chief economist Andy Haldane.

The MPC then warned in August that a "modest tightening" of policy may be required to help cool prices as it predicted the consumer prices index (CPI) measure of inflation hitting a 10-year high of 4%.

It is currently at 3.2% following the largest leap on record.

The Bank said on Thursday that it now expected CPI to exceed 4% by the year's end.

The split on the MPC around tapering support grew as a second member, deputy governor Dave Ramsden, joined Michael Saunders in voting for an early end to government bond purchases.

A summary of the meeting read: "Since the August MPC meeting, the pace of recovery of global activity has showed signs of slowing.

"Against a backdrop of robust goods demand and continuing supply constraints, global inflationary pressures have remained strong and there are some signs that cost pressures may prove more persistent."

It added: "The material rise in spot and forward wholesale gas prices since the August Report represents an upside risk to the MPC's inflation projection from April 2022.

"Most other indicators of cost pressures have remained elevated. The Committee's central expectation continues to be that current elevated global cost pressures will prove transitory."

The Bank also said it would be watching carefully the impact of the furlough scheme's demise at the end of the month.

It delivered its verdict hours after a snapshot of private business activity pointed to stagnating economic growth and an acceleration in the pace of price increases - a scenario known as "stagflation".

The IHS Markit/CIPS flash purchasing managers' index survey showed confidence at its weakest since January.

Chris Williamson, IHS Markit's chief business economist, said of the findings: "While there are clear signs that demand is cooling since peaking in the second quarter, the survey also points to business activity being increasingly constrained by shortages of materials and labour, most notably in the manufacturing sector but also in some services firms.

"A lack of staff and components were especially widely cited as causing falls in output within the food, drink and vehicle manufacturing sectors.

"Shortages are meanwhile driving up prices at unprecedented rates as firms pass on higher supplier charges and increases in staff pay."

Commenting on the Bank of England meeting, chief UK economist at Pantheon Macroeconomics, Samuel Tombs, said: "The MPC is waiting until November to provide a clearer steer on the outlook for interest rates, as by then it will be able to make an initial assessment of the wind-down of the furlough scheme and review the latest fiscal plans in the October 27 Budget."
Comments

Oh ya 4 year ago
Central banks of the world can not raise interest rates to slow inflation because countries are so far in debt they could not afford to make the payments on their loans at the higher rate. It will all stop when we hit the Venezuela moment

Newsletter

Related Articles

0:00
0:00
Close
Controversial March in Switzerland Features Men Dressed in Nazi Uniforms
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
Thai Civilian Death Toll Rises to 12 in Cambodian Cross-Border Attacks
TSUNAMI: Trump Just Crossed the Rubicon—And There’s No Turning Back
Over 120 Criminal Cases Dismissed in Boston Amid Public Defender Shortage
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
Trump Announces $550 Billion Japanese Investment and New Trade Agreements with Indonesia and the Philippines
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
Microsoft, US Lab to Use AI for Faster Nuclear Plant Licensing
Trump Walks Back Talk of Firing Fed Chair Jerome Powell
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Irish Tech Worker Detained 100 days by US Authorities for Overstaying Visa
Dimon Warns on Fed Independence as Trump Administration Eyes Powell’s Succession
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Jeff Bezos Considers Purchasing Condé Nast as a Wedding Gift
Ghislaine Maxwell Says She’s Ready to Testify Before Congress on Epstein’s Criminal Empire
Bal des Pompiers: A Celebration of Community and Firefighter Culture in France
FBI Chief Kash Patel Denies Resignation Speculations Amid Epstein List Controversy
Air India Pilot’s Mental Health Records Under Scrutiny
Google Secures Windsurf AI Coding Team in $2.4 Billion Licence Deal
×