Bank of England Faces Dilemma as Inflation Rises Again
UK inflation rose to 3.1 per cent in August, surpassing the Bank of England's 2 per cent target for the second time this month.
The increase was driven mainly by higher energy and transport costs, with motor fuel prices rising 23 per cent year on year and electricity, gas, and other household fuel costs increasing 6 per cent.
Nigel Green, chief executive of financial advisory group deVere Group, said markets are pricing in a high probability that the Bank will keep its key rate at 3.75 per cent on Thursday, with expectations shifting towards November.
Green warned that holding rates steady could be the costlier decision, citing the Bank's experience during the inflation surge of 2021 as an example. He argued that waiting for more data before acting has a cost, and pointed to elevated borrowing costs as a warning signal.