Ashton Whiteley: Inflation still close to its highest level since Brexit vote and BoE to raise interest rates sooner than expected.
Press Release – updated: Feb 15, 2018 09:00 CST
SHANGHAI, February 15, 2018 – Ashton Whiteley: UK inflation remained close to its highest level in almost six years, emphasizing the problems facing the Bank of England. Economists at Shanghai, China-based investment house Ashton Whiteley believe that this data further supports expectations that the BoE will hike interest rates again as early as May this year.
According to the Office of National Statistics, consumer price inflation remained at the same rate since December of last year after reaching its highest level in almost 5 years when it hit 3.1 percent in November.
The pound rose 0.5 percent against the dollar after last week’s data while UK government bond prices declined in contrast to an increase in the price of German bunds.
Inflation increased in the UK after the Brexit vote in June 2016 when Britain voted to depart from the European Union, which damaged the value of sterling and pushed up the price of imports.
On the other end of the scale, despite strong economic growth, many countries are dealing with below-target inflation.
Last week the BoE made a surprise announcement saying it would need to increase interest rates sooner than it had anticipated and that it hoped to get inflation back to its target within a period of two years instead of three.
Ashton Whiteley economists believe that inflation appears to have reached its peak as the effect of the currency’s devaluation after the Brexit referendum has started to fade.
However, there are indications that there will be an increase in wages and this suggests that price growth may not decline as rapidly as the BoE hoped.
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Source: Ashton Whiteley