Bank of England Governor Andrew Bailey, during his visit to Northern Ireland on Friday, projected a significant drop in UK’s October inflation. This follows an unexpected pause at 6.7% in September and contradicts earlier predictions of Consumer Price Index (CPI) inflation reaching 4.9% by the end of the year.
Despite Wednesday’s inflation surpassing expectations, Bailey expressed confidence in the central bank’s strategies to curb inflation. He emphasized the need for a considerable reduction in wage inflation to align with the Bank’s two per cent target rate.
The EY Item Club also predicts that the UK will avoid a recession despite the Bank of England’s interest rate increases. Huw Pill, the chief economist, suggests that these heightened rates will endure longer to fight persistent inflation.
Bailey attributed the expected decrease in October’s inflation to comparisons against last year’s substantial energy price increases. He acknowledged that current wage growth is not consistent with this target but showed optimism about noticeable signs of declining inflation.
This perspective follows a report from the Office for National Statistics (ONS) indicating wages exceeding inflation for the first time in nearly two years with a 7.8% increase. Despite this, Bailey remained assertive that it did not hinder the central bank’s anti-inflation efforts and was within their prediction.
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