By Swann Collins, investor and consultant in global affairs. Eurasia Business News – October 23, 2021

View on Big Ben from Trafalgar Square, London. Photo credits : Swann Collins

Inflation in the UK could exceed 5% this year, believes Bank of England (BoE) chief economist Huw Pill in an interview with the Financial Times, as markets expect rates to rise. fast and strong interest in the country.

I wouldn’t be surprised, let’s put it that way, if we saw inflation approaching or above 5%. And it is a very uncomfortable position, for a central bank which has an inflation target of 2%“, declared Huw Pill in an interview Thursday evening with the economic daily.

Inflation slowed slightly in the UK in September, to 3.1% year on year, but remains high after a record surge in August to 3.2%, its highest level since 2012. In its latest projections, the BoE had said it expected it to reach 4% before the end of the year.

Investors were already betting on monetary tightening by the BoE before the end of 2021. But its governor Andrew Bailey said Sunday that his institution could be in a position “must act” to control soaring inflation. Investors are now betting on a rise earlier and earlier, starting at the next meeting in November, followed by a further rise the following month. If market expectations are confirmed, the Bank of England will have acted faster than the European Central Bank (ECB) or the US Fed.

The Bank of England faces the same dilemma as all other central banks, as UK inflation is fueled by supply chain issues, labor shortages, the high cost of raw materials or soaring energy prices.

The British pound, for its part, continues to break its records against the euro, which reached 84.21 pence on October 22, at its strongest since February 2020.

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© Copyright 2021 – Swann Collins, investor and consultant in global affairs.