Rising energy prices will weigh on consumer spending and gross domestic product growth in the U.K. next year. At its meeting on Thursday, the Bank of England’s Monetary Policy Committee should be more concerned about the negative impact on the economic recovery from soaring energy prices than about the upward impact on headline inflation.
The committee will continue to largely ignore moves in volatile energy commodities and focus on the outlook for the underlying economy, which has weakened a little since its last meeting. We suspect financial markets are getting ahead of themselves in expecting the MPC to hike rates early next year. Instead, the first rate hike will probably come late in the second half of 2022.
Read the full article at rsmuk.com.
