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The central bank’s loose policy continued in the UK

The British Federal Reserve’s monetary board said in a 17-page announcement of its September meeting on Thursday that it sees recent inflation drivers as temporary and temporary. According to the report, the Monetary Council unanimously decided to maintain the record low base rate of 0.10 percent, while voting 7-2 to maintain the target amount of the current government bond purchase program.

The maintenance of the purchase envelope for corporate securities was unanimously approved by the Monetary Council. Two members, Dave Ramsden and Michael Saunders, voted to reduce the target amount for the purchase of government securities by the Bank of England to 840 billion pounds.

In March last year, at the start of the coronavirus crisis, the Bank of England cut interest rates from 0.75 per cent to the current 0.10 per cent in two extraordinary meetings, and from 445 billion pounds previously pledged in three steps to 895 billion pounds. (£371 trillion). Increase the quantitative easing framework. Of this, the central bank can buy up to £875 billion of UK government securities and £20 billion worth of sterling bonds from companies outside the financial sector.

According to the British Statistics Office (ONS), the twelve-month consumer inflation rate was 3.2 per cent in August after 2 per cent in July. The one-month acceleration of 1.2 percentage points was the largest monthly increase in annual inflation rates in the UK since the regular publication of twelve-month inflation rates began in January 1997, nearly a quarter of a century ago. The inflation target set by the British government for the Bank of England is 2 per cent.

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Thursday’s announcement by the Bank of England’s monetary board makes it likely that 12-month inflation is expected to accelerate further in the fourth quarter of this year, to just over 4 per cent, mainly due to higher energy prices. According to the commission, due to the surge in spot and futures prices of natural gas, UK inflation could exceed 4 per cent even in the second quarter of 2022.

However, communications confirm this

The Bank of England’s Monetary Board continues to view the current global cost pressures as temporary.

According to the Committee’s decision, there is good reason to believe that global commodity markets will provide a meaningful response to the situation on the supply side, which will lead to lower purchase prices and therefore import costs. Additionally, he works as an analyst at the Bank of England lowered its forecast for third-quarter GDP growth from 2.9 percent to 2.1 percent, The revision is partly justified by bottlenecks on the part of the supplier and their impact on emissions.

However, financial analysts in London say the beginning of the monetary tightening cycle is approaching. One of London’s top macroeconomic analysts, the Center for Economics and Business Research (CEBR), said in its assessment of the situation on Thursday that it considers inflationary factors to be less temporary than the BoE and expects the central bank to enter the interest cycle. Raising interest rates in the second quarter of 2022.

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