Commenting on the Bank of England MPC meeting today and the vote to keep its policy rate at 3.75%, Barret Kupelian, Chief Economist at PwC, said:
“The Bank of England has held rates, but it has not taken its eye off inflation. Unlike the European Central Bank, which raised rates last week, the Monetary Policy Committee has chosen to wait and see whether the Middle East agreement can ease some of the pressure coming through energy markets, traded goods, and wider supply chains.
“The risk is that uncertainty becomes inflation by another name. Futures curves are pointing downwards, but risk premia can move quickly and businesses still have to make pricing decisions in real time. For the MPC, the key question is whether this remains a relative price shock or whether it starts to show up in wages, margins and second-round effects.”
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