The Bank of England has said that interest rates will remain at historic lows, even though inflation is climbing to more than 4%.
However, the Bank added that “some modest tightening of monetary policy is likely to be necessary,” and that rates would rise if the high inflation turned out to be anything other than a short-term blip.
Governor Andrew Bailey said he thought the economic recovery from coronavirus would be “bumpy” and the period of high inflation would be “temporary”, but it was right to change the committee’s guidance because “the MPC takes the risk of persistently higher inflation very seriously”.
