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The Progressive Policy Think Tank

Bank of England risk keeping interest rates “too high for too long”, says IPPR

Reacting to today’s interest rate announcement from the Bank of England Carsten Jung, IPPR senior economist, said: 
“The Bank of England decided to hold rates steady, citing slowing but still persistently high services inflation and pay growth. But the Bank’s rate is still likely too high. The labour market is continuing to loosen, and company insolvencies are at their highest since 2009.  

“High rates take more than a year to fully take effect and we will continue to see the economy and inflation slowing over the next months. There is a risk of the Bank keeping rates too high for too long.  

“The Bank also is not transparent enough about how it models ‘passthrough’ inflation, nor how it expects corporate profits to evolve – both of which are key for understanding inflation at this point.”