IMF Forewarns Bank of England On Interest Rates Inaction
London, 14 December 2021
According to the Office for National Statistics, the annual consumer prices rose in 4.2% in the UK in October, which is the highest 12-month inflation rate since November 2011.
The November inflation data is expected on Wednesday, one day before the Bank of England’s next meeting.
Under inflationary pressures globally, the International Monetary Fund (IMF) warned the Bank of England on Tuesday that inaction on interest rates could continue to raise costs and allow space for further inflation rise.
The IMF, in its United Kingdom Staff Concluding Statement of the 2021 Article IV Mission, said: "Given the shadow of Covid-19/Omicron uncertainty, in choosing the pace policymakers will have to weigh risks," But if it would take early action on interest rates, it could also slow economic recovery”.
"It would be important to avoid inaction bias. Careful communication would be needed to lay the groundwork with markets for potentially more frequent policy moves.", the statement concluded.
(Research and edit by: The Decision Maker)