Jonathan Haskel, who is a member of the monetary policy committee (MPC), recently talked about how the Bank of England may have to raise interest rates again to combat inflation.
According to Jonathan Haskel, the BoE have to introduce multiple rate hikes in order to bring inflation down from its current levels of 4.5%.
He also added that it is important to not take the risk of inflation lightly, and that means we can't rule out more rate hikes from the central bank. In his opinion, the current economic circumstances in the UK are difficult, but they are not as difficult as the embedded inflation.
Inflation Poses A Major Threat To UK Economy
According to the MPC, the risks associated with embedded inflation are a lot worse than what appears on the surface.
Economists believe that the Bank of England will likely raise the lending rate next week to around 4.75%. In addition, some market experts believe that the interest rates will likely reach 5.5% by the end of 2023. After all, the inflation levels in the UK are still at record highs and are effecting the public at large.
Earlier, Hask made comments just like that and talked about the importance of working on the inflation problem. If we look at the consumer price inflation in the UK, its speed of drop was lower than what was expected during April.
And it appears that BoE is also fully aware of the problems arising from inflation. That's why Haskel also said that they are monitoring the persistence and momentum of inflation very closely.
Based on the forecasts made by economists and the comments from MPC, it appears that no rate cuts from the BoE are on the cards. At least, that's what it appears for the year 2023, but we can't say anything about the next year as it is still too soon to reach any conclusions.