Inflation is forecast to hit 4% in September, exceeding the Bank of England's target. The Monetary Policy Committee described this increase as temporary, anticipating a return to the 2% target afterward. There are concerns about ongoing price rises in food, energy, and labor costs, but a notable cut in interest rates to 4% was made, reflecting a cautious outlook on economic growth and the job market. The MPC remains vigilant about potential upward pressure on wages due to temporary inflation increases.
The Monetary Policy Committee (MPC) members said the hike in inflation will be "temporary." CPI inflation is forecast to increase slightly further to peak at four per cent in September.
Scottish Friendly savings expert Kevin Brown said: "The Monetary Policy Committee didn't disappoint, cutting rates to four per cent as expected. The move came in spite of inflation hitting 3.6 per cent in June, significantly ahead of the Committee's target of two per cent."
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