London Daily

Focus on the big picture.
Thursday, Nov 20, 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to come at a time when government COVID aid, including furlough cash and the Universal Credit uplift, will have been withdrawn.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
ASU Launches ASU London, Extending Its Innovation Brand to the UK Education Market
UK Prime Minister Keir Starmer to Visit China in January as Diplomatic Reset Accelerates
Google Launches Voluntary Buyouts for UK Staff Amid AI-Driven Company Realignment
UK braces for freezing snap as snow and ice warnings escalate
Majority of UK Novelists Fear AI Could Displace Their Work, Cambridge Study Finds
UK's Carrier Strike Group Achieves Full Operational Capability During NATO Drill in Mediterranean
Trump and Mamdani to Meet at the White House: “The Communist Asked”
Nvidia Again Beats Forecasts, Shares Jump in After-Hours Trading
Wintry Conditions Persist Along UK Coasts After Up to Seven Centimetres of Snow
UK Inflation Eases to 3.6 % in October, Opening Door for Rate Cut
UK Accelerates Munitions Factory Build-Out to Reinforce Warfighting Readiness
UK Consumer Optimism Plunges Ahead of November Budget
A Decade of Innovation Stagnation at Apple: The Cook Era Critique
Caribbean Reparations Commission Seeks ‘Mutually Beneficial’ Justice from UK
EU Insists UK Must Contribute Financially for Access to Electricity Market and Broader Ties
UK to Outlaw Live-Event Ticket Resales Above Face Value
President Donald Trump Hosts Saudi Crown Prince Mohammed bin Salman at White House to Seal Major Defence and Investment Deals
German Entertainment Icons Alice and Ellen Kessler Die Together at Age 89
UK Unveils Sweeping Asylum Reforms with 20-Year Settlement Wait and Conditional Status
UK Orders Twitter Hacker to Repay £4.1 Million Following 2020 High-Profile Breach
Popeyes UK Eyes Century Mark as Fried-Chicken Chain Accelerates Roll-out
Two-thirds of UK nurses report working while unwell amid staffing crisis
Britain to Reform Human-Rights Laws in Sweeping Asylum Policy Overhaul
Nearly Half of Job Losses Under Labour Government Affect UK Youth
UK Chancellor Reeves Eyes High-Value Home Levy in Budget to Raise Tens of Billions
UK Urges Poland to Choose Swedish Submarines in Multi-Billion € Defence Bid
US Border Czar Tom Homan Declares UK No Longer a ‘Friend’ Amid Intelligence Rift
UK Announces Reversal of Income Tax Hike Plans Ahead of Budget
Starmer Faces Mounting Turmoil as Leaked Briefings Ignite Leadership Plot Rumours
UK Commentator Sami Hamdi Returns Home After US Visa Revocation and Detention
UK Eyes Denmark-Style Asylum Rules in Major Migration Shift
UK Signals Intelligence Freeze Amid US Maritime Drug-Strike Campaign
TikTok Awards UK & Ireland 2025 Celebrates Top Creators Including Max Klymenko as Creator of the Year
UK Growth Nearly Stalls at 0.1% in Q3 as Cyberattack Halts Car Production
Apple Denied Permission to Appeal UK App Store Ruling, Faces Over £1bn Liability
UK Chooses Wylfa for First Small Modular Reactors, Drawing Sharp U.S. Objection
Starmer Faces Growing Labour Backlash as Briefing Sparks Authority Crisis
Reform UK Withdraws from BBC Documentary Amid Legal Storm Over Trump Speech Edit
UK Prime Minister Attempts to Reassert Authority Amid Internal Labour Leadership Drama
UK Upholds Firm Rules on Stablecoins to Shield Financial System
Brussels Divided as UK-EU Reset Stalls Over Budget Access
Prince Harry’s Remembrance Day Essay Expresses Strong Regret at Leaving Britain
UK Unemployment Hits 5% as Wage Growth Slows, Paving Way for Bank of England Rate Cut
Starmer Warns of Resurgent Racism in UK Politics as He Vows Child-Poverty Reforms
UK Grocery Inflation Slows to 4.7% as Supermarkets Launch Pre-Christmas Promotions
UK Government Backs the BBC amid Editing Scandal and Trump Threat of Legal Action
UK Assessment Mis-Estimated Fallout From Palestine Action Ban, Records Reveal
UK Halts Intelligence Sharing with US Amid Lethal Boat-Strike Concerns
King Charles III Leads Britain in Remembrance Sunday Tribute to War Dead
UK Retail Sales Growth Slows as Households Hold Back Ahead of Black Friday and Budget
×