Belfast Telegraph

BoE to keep interest rates at 0.25% as inflation rises

By Holly Williams

The Bank of England is expected to keep interest rates on hold today despite mounting pressure to take action as households suffer amid soaring inflation.

This month's decision comes in the wake of official figures showing inflation hit 2.9% in May - its highest level in nearly four years and far higher than expected.

The figures laid bare the squeeze on household finances as inflation outstrips wage growth, with CPI having been sent soaring as the Brexit-hit pound has pushed up the price of imported goods and energy.

But economists believe the Monetary Policy Committee (MPC) will keep rates at 0.25% for some time as it continues to look through above-target inflation for the good of the economy.

The minutes of the MPC's rates meeting will be watched closely for the Bank's latest thinking on prospects for inflation and the pound following the shock election result last week.

After May's hike, economists now believe the Consumer Prices Index (CPI) will rise above 3% over the summer.

Belfast Telegraph