'One and done' rate hints hit pound after 3% inflation

'One and done' rate hints hit pound after 3% inflation

'One and done' rate hints hit pound after 3% inflation

A reversal in the Bank's post-Brexit-vote, quarter percentage point cut in base rate looks nearly certain in November, particularly after news today that the consumer price index (CPI) rose at an annual rate of 3% in September.

Carney noted that United Kingdom central bank's monetary policy is encouraging, and in future, United Kingdom economy could face various difficulties.

The pair were speaking to the Treasury Select Committee.

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. She said she might vote for a rate rise as "we are approaching a tipping point" but said she was watching the economic data closely as "rasising rates too soon would be a costly mistake".

'There has been much talk of a rate hike later this year by the Bank of England, but with so many areas of weakness in the economy, and high levels of indebtedness, a rate rise could be a step too far for the Bank of England, at least until there is more clarity on Brexit, ' he said.

But the governor also said that the Bank had been right to cut interest rates in the aftermath of the Brexit vote, as this had "supported the adjustment in the economy".

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"The MPC will probably be focussed more on tomorrow's wage growth figures for any signs that domestic cost pressures are building", he said, predicting inflation will be back below 3% by the end of the year and will end 2018 at around 2.25%. The pound was little changed by the inflation numbers as most investors have already priced in a likely November rate hike.

Though Silvana Tenreyro, one of the newest members on the Bank of England's rate-setting panel, told lawmakers Tuesday that the pressure from this depreciation will "start to wane in coming months", she conceded that she was "minded" to back higher rates "in coming months".

However, the British pound remained lower against the dollar despite confirmation of Carney's view on inflation.

Carney, who is due to address lawmakers on Tuesday, has stressed that interest rate rises, when they come, will be modest and gradual, partly because of the uncertainty surrounding Brexit.

"Overall, today's data are consistent with our view that the Monetary Policy Committee will raise interest rates in November, but it won't be panicked into doing so by concerns about inflation".

The latest report is in line with the forecast issued by the BoE in August, when it said it expected CPI inflation to peak at 3% in October this year.

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