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Ekonomické zprávy

The Bank of England may be forced to continue tightening monetary policy - Central Bank policymaker

Bank of England policymaker Catherine Mann said that given the continuing risk that inflation may prove stubbornness, the Bank of England should continue tightening monetary policy. Thus, it weakened market expectations that the Bank of England is preparing to suspend the rate hike. Earlier this month, Bank of England Governor Bailey signaled that the 10th consecutive rate hike implemented at the February meeting could be the last, as he said there has been a "turning of the corner" on inflation in recent months.

"Uncertainty about turning points in the fight against high inflation should not prompt a wait-and-see approach, since the consequences of insufficient policy tightening far outweigh the consequences of excessive tightening," Mann said, adding that the Bank is likely to make another rate hike.

According to official data from (ONS) consumer prices rose by 10.5% per annum in December after rising by 10.7% per annum in November. It marks a second consecutive month of slowing inflation and the lowest rate in three months. Core CPI - which excludes energy, food, alcohol and tobacco - was unchanged at 6.3% in December. On a monthly basis, the consumer price index rose by 0.4%, as in November. The BoE expects the UK's CPI to fall to around 4% towards the end of 2023, "alongside a much shallower projected decline in output than in the November report forecast." The bank said the MPC will continue to "monitor closely indications of persistent inflationary pressures" and adjust the bank rate if necessary.

Mann, who was one of seven MPC members who voted to raise rates, said she still sees "significant risks to the inflation outlook" and cautioned against "complacency about inflation." "The moderation of inflation this year has to be as rapid and complete on the downside as its ratchet-up was last year," she added.

Meanwhile, she warned that suspending rate hikes only to resume raising them later would be devastating for inflation expectations.

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