Inflation Warning 5 Per Cent

Inflation Warning 5 Per Cent.

According to Andrew Sentance, the pound’s weakness threatens to boost inflation above 5 per cent, supporting the need for higher interest rates.  Mervyn King, governor of the Bank of England has previously warned inflation could top 5 per cent due to rising inflation expectations and higher commodity prices.

Mr Sentance, believes the UK is seeing more imported inflation than if the pound was stronger and believes a boost to the pound from a rate increase would not be an unwelcome development in the attempt to curb inflation.

However, the Monetary Policy Committee has voted to keep interest rates at a record low of 0.5 per cent this month, to aid the economic recovery.

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