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Inflation in the United Kingdom has not yet seen the summit
July 19 2018, 05:26 | Alonzo Simpson
The headline CPI rate edged up from 2.9 per cent in August to reach the highest level since 2012 last month
The governor would not be drawn on the likelihood of interest rates rising in November, but said the challenge the central bank faces is to strike a balance between putting rates up to ease inflationary pressure in the economy, and keeping monetary policy loose to aide the economy in times of economic strife. Higher food prices and recreational goods were the main factors in the cost of living increase, said the Office for National Statistics.
Tenreyro, meanwhile, aired her opinion that she wasn't yet ready to vote for a rate hike.
BOE deputy Governor Dave Ramsden was answering United Kingdom lawmaker's questions in a parliamentary committee, alongside new external BOE policy setting member, Silvana Tenreyro.
Ramsden said he was not part of that majority, which included BoE Governor Mark Carney.
"Despite continued robust growth in employment there is no sign of second-round effects onto wages from higher recent inflation", Ramsden told MPs.
The expected rate rise comes despite evidence that the British economy is faltering - it is growing slower than any other Group of Seven industrial economy this year - and that inflation is expected to ease back in coming months.
The important thing is to focus on actions of bank's jurisdiction, Carney said, "we can contribute to price stability and financial stability".
"I think it's more likely than not that I will be writing on behalf of the MPC a letter to the chancellor", Carney said.
Data on Tuesday showed United Kingdom inflation hit 3 percent in September, its highest level in more than five years and above the BoE's 2 percent target.
However, the British pound remained lower against the dollar despite confirmation of Carney's view on inflation.
(Update:) Inflation has hit a five-year high of 3% and the question on everybody's lips is will the Bank of England raise interest rates next month?
Also, there is a belief that the bank will lose credibility if once again it puts the market on notice for a rate hike and fails to deliver.
Michael Hewson, chief market analyst, at CMC Markets, said: "As it is several members of the MPC have signalled that rates could move in the coming months and while we're hearing some stark warnings about the risks of reversing last year's rate cut, the bond markets have already made the adjustment and already priced it in". Figures due Wednesday are set to show that wage gains are lagging inflation by about a percentage point, meaning household incomes are falling, a trend that has the potential to depress economic activity.