The Bank of England has been accused of going soft on its core mandate after adopting a less aggressive stance on monetary policy than the US Federal Reserve — despite expecting inflation to hit 11 per cent this year.
The UK central bank on Thursday dropped guidance that more interest rate rises were likely in the months ahead, even as it warned inflation would reach a high in October. It raised rates by an expected 0.25 percentage points to 1.25 per cent, as three Monetary Policy Committee members who called for a 0.5 percentage point increase were outvoted.
Ruth Gregory, of Capital Economics, said core UK inflation was likely to be above the US until mid-2023 and therefore “the MPC will need to move policy to a restrictive stance relatively quickly”.