CBI responds to latest interest rate decision

Anna Leach, CBI Deputy Chief Economist, said:

“The MPC has again been driven to raise rates by stubbornly high inflation, ongoing strength in wage growth, and better-than-expected activity. With inflation having been at or above 9% for a full year, the Bank are rightly concerned that higher inflation could become entrenched”.

“The future path for interest rates is as yet uncertain. With ongoing bouts of banking sector turbulence in the US, risks to financial stability seem likely to persist as global interest rates continue to ratchet up and the full impact of past rises continues to feed through. While credit costs have so far adjusted smoothly, further material turbulence could yet disrupt activity, requiring a looser monetary stance. On the other hand, inflation could surprise to the upside, particularly if wage rises remain elevated, suggesting further rate rises”.