– the pace of price rises with the most volatile factors stripped out – is not yet falling, the Bank is forecast to increase rates for a 15th consecutive time.
Core inflation remained unchanged at 6.9 per cent in July, indicating that price increases are being driven by domestic factors such as wage growth, which are thought to be most responsive to changes in interest rates.called for the Bank to increase the rate to 5.5 per cent or even 5.75 per cent, from its current level of 5.25 per cent, when the monetary policy committee meets in a few weeks’ time.
Rate-setters have indicated they believe they need to keep raising borrowing costs, to remove spending power from the economy and encourage people to save instead. Those in favour of a further increase point to the current rate of core inflation, which does not include more volatile price increases such as those of food and energy.While the Consumer Prices Index rate of inflation fell from 7.9 per cent in June toThis could be evidence of how embedded price rises have become, they argue.that are linked to the base rate.
If it works as intended, an increase can lower the rate of price increases, but a side effect is that it slows down economic growth, which risks a recession.Some economists and politicians fear there is a risk the UK will be tipped into recession if the Bank moves too aggressively, pointing to early signs that
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