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Think tank says UK interest rates may need to rise to 5%
The NIESR warns that delayed tax, spending and monetary decisions could keep inflation high and strain public finances, affecting business and government planning.
What happened
The National Institute of Economic and Social Research said interest rates may need to rise as high as 5% to control inflation. Yahoo News+1 The think tank said monetary and fiscal policy decisions were being deferred, risking worse inflation and strain on the public finances. Yahoo News+1 New NIESR forecasts show UK CPI inflation peaking at around 4.4% in February, up from the 3.8% peak predicted in July. Yahoo News+1
Around it
The Bank of England raised interest rates to 4% last week, the first increase in more than three years. Yahoo News+1 The NIESR expects one more Bank of England rate rise but says it would not be enough, with inflation not returning to the 2% target until late 2030. Yahoo News The think tank said this would hit poorer households hardest, as they would have no choice but to buy less rather than adjust spending or dip into savings. Yahoo News
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