The Bank of England has made a dramatic rise to its inflation forecast for 2017, predicting that the rate will almost triple.
The Bank now expects inflation to hit 2.7% next year, up from the current rate of 1%.
It also raised its forecast for economic growth next year to 1.4% from 0.8%, but cut expectations for 2018 to 1.5% from 1.8%.
An interest rate cut this year was no longer an option, the Bank indicated.
"In light of the developments of the past three months, all MPC [Monetary Policy Committee] members agreed that the guidance it had issued following its August meeting regarding the likelihood of a further cut in [the] bank rate had expired," the Bank said.
The sharp rise in inflation expectations was blamed on the slide in the pound since the referendum, which is driving up prices of imported goods.
The Bank does not expect inflation to return to its 2% target until 2020.
The revisions to growth indicate that the Bank now thinks the impact of the Brexit vote will be felt later than expected.
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