BoE raises Bank Rate by 50bps to 1.75% by 8-1 vote. Known dove Silvana Tenreyro voted for just 25bps hike. In the accompanying statement, BoE said the MPC will “take the actions necessary to return inflation to the 2% target sustainably in the medium term”. Policy is “not on a pre-set path”. But it will be “particularly alert to indications of more persistent inflationary pressures”, and will “if necessary act forcefully in response.”
In the Monetary Policy Report, CPI is projected to peak at “just over 13%” in Q4, due to Russia restricting the supply of gas to Europe and the risk of further curbs. It’s projected to fall to 5.5% by the end of 2023, and back at 2% in Q3 2024.
GDP growth is expected to slow further from Q2’s 0.5% to 0.2% in Q3, and then decline by nearly -1% in Q4. GDP is also forecast to all further, by -1.50% in 2023, and then -0.25% in 2024.
