Bank of England sees higher inflation spike but downplays risk to economy | Economic news

The Bank of England has raised its expectations for inflation, but reiterated its view that the surge in prices linked to the coronavirus crisis in recent months does not represent a looming crisis for the economy.

Minutes of the last meeting of the Bank’s Monetary Policy Committee (MPC), which left interest rates unchanged at their COVID-19[female[feminine the pandemic low of 0.1%, showed that GDP growth expectations in the current second quarter had been revised upwards by 1.5%.

But they also revealed that policymakers now expect the aggregate measure of inflation to exceed 3% “for a temporary period.”

This was the Bank’s first official reaction to data released earlier this month that showed the Consumer Price Index (CPI) exceeding the Bank’s 2% target in May – months earlier than expected by the MPC.

The surge in the annual rate of the CPI has been led by the economy reopening since March, with prices for clothing, fuel and hospitality driving the load.

This is a distortion as the same month last year marked the start of business hibernation when the first UK lockdown was imposed.

Another factor behind the inflationary bubble was the shortage of raw materials.

A closely watched purchasing managers’ survey released on Wednesday showed a measure of inflation reach a common record.

This left economists and financial markets eagerly eyeing the Bank’s update for evidence of a shift in the MPC’s main view that rising inflation is ‘transient’ – a consequence of the change. of demand compared to a year ago.

The minutes read: “Since May, developments in global GDP growth have been somewhat stronger than expected, especially in advanced economies.

“Global price pressures have intensified further, reflecting strong demand …