In the view of the International Monetary Fund (IMF), Great Britain’s central bank may need to keep interest rates high for a longer period in the fight against inflation. Inflation in the UK was 8.7 per cent in May. If inflationary pressures persist, the IMF said on Tuesday that interest rates would need to rise further and remain high for a longer period to keep inflation under control and keep inflation expectations under control. “A continued review of the pace and extent of monetary tightening is warranted,” the fund said after its annual review of the UK economy.
The IMF reiterated its May forecast that the UK would avoid recession this year and that the economy would grow by 0.4 per cent. Inflation will ease to “around 5.25 percent” by the end of this year. In its May forecast, the IMF projected inflation to be around five percent by the end of 2023. However, both projections assume that inflation will remain below the Bank of England’s target of two percent by mid-2025.
Federal Reserve Chairman Andrew Bailey pledged on Monday to complete the task of bringing inflation back to the 2 percent target. In June, monetary watchdogs stepped up their efforts to combat inflation and raised the key interest rate by half a percentage point to 5.0 percent. This is the highest level since 2008. This is the 13th consecutive rise. At the same time, the central bank was prepared for a continuation of the tightening trend.
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