The Bank of England (BoE) will bring inflation back to its 2% target, from over 9% currently, Governor Andrew Bailey has said.
“The Committee will be particularly attentive to indications of more persistent inflationary pressures and will act forcefully in response if necessary. Getting inflation back to the 2% target in a sustainable way is our job, no ifs and no buts,” Bailey said in a speech hosted by OMFIF, a central banking think tank.
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Inflation, which hit a 40-year high of 9.1% in May, is expected to hit 11% this fall.
The Bank of England raised interest rates for the fifth consecutive time in seven months.
They have risen to a 13-year high of 1.25%, which will drive up the cost of getting a mortgage.
“The magnitude, pace and timing of any further Bank Rate increases will reflect the Committee’s assessment of economic prospects and inflationary pressures,” Bailey said.
Investors see a nearly 70% chance of a larger than usual rate hike of half a percentage point by the BoE on August 4.
This week Bailey told MPs he still believes inflation will fall sharply next year.
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“I always go into the forecast with an open mind, and that’s key, but I think the basic fundamentals of that profile remain in place today.”
Inflation should return to its 2% target in about two years, he said, although pressure on gasoline prices following the war in ukraine could change that.
The central bank said last month it was ready to act “forcefully” if necessary to prevent the recent surge in inflation from taking root in the economy.