BoE holds rates at 0.1% but warns of further 'temporary' inflationary pressure

Inflation to rise to 4% by the end of 2021

The Bank of England’s Monetary Policy Committee has voted unanimously to maintain its key interest rate at 0.1%, as the central bank announced that it expects inflation to continue to rise above 2% and not fall back to its target for “around two years”.

Its quarterly Monetary Policy Report, published today (5 August), updated the bank's forecasts to predict the UK inflation rate to continue to rise beyond 4% by the end of 2021, before falling closer to target in the following year. The MPC's 4 August meeting, minutes of which were published today, also saw confirmation the BoE would hold the amount of quantitative easing at £895bn, by a margin of seven-to-one. The UK's Consumer Price Index beat expectations by rising 2.5% in the 12 months to June 2021, marking the strongest acceleration in inflation since August 2018. In its lates...