Inflation in the United Kingdom has not yet seen the summit

Chelsea West
October 18, 2017

Inflation rate climbs to 3%.

Ramsden told the questioning Parliamentary committee that he didn't anticipate inflationary pressures would build strongly enough in the coming months, to warrant an immediate rate hike.

The rise in September inflation gave additional evidence of a continuing effect from last year's sterling depreciation, as much of the rise came in those components of the CPI that are especially sensitive to movements in the exchange rate.

Dave Ramsden, the new deputy governor of the Bank of England said that he was not in support of voting for an interest rate hike, calling into question when the BoE will implement its first interest rate hike in over ten years.

And Tenreyro, who is an economics professor at the London School of Economics, said: "My view is that we are approaching a tipping point at which it would be necessary or justified to remove some of that stimulus".

According to data released by the Office for National Statistics (ONS) on Tuesday (17 October), inflation as measured by the Consumer Price Index (CPI) rose 3% year-on-year last month, compared with the 2.9% growth recorded in September and in line with analysts' expectations.

More news: Hartley to Race for Toro Rosso at Austin

Nathan Sweeney, senior investment manager at Architas, agreed a rate rise was now likely next month but said the bigger question was where the Bank went to after that, given that inflation had probably now peaked and the economy was slowing down in response to Brexit.

The pair were speaking to the Treasury Select Committee.

Many economists still remained confident that Carney and co would still hike rates at their coming meeting.

The Bank governor is required to write to the Chancellor, Philip Hammond, if inflation moves more than one per cent above the 2 per cent target level. "We expect that inflation will peak in and around the October figure, October-November figures, peaking potentially above the 3% level".

The pound was little changed by the inflation numbers as most investors have already priced in a likely November rate hike.

Higher inflation also raises the chance of policymakers hiking interest rates next month, which in turn tends to strengthen a currency.

Other reports by TheSundaySentinel

Discuss This Article