Today, Bank of England deputy Governor Ben Broadbent noted that inflation in Britain may “exceed” 5% in April and a risky labor market could drive continued inflation.
The BoE administration trying to steer the economy to recover from the pandemic stated that that inflation will hit about 5% in the second quarter of 2022 before starting to record a downturn. On that basis, Broadbent suggested that the inflation forecast may need to be raised further.
"The aggregate inflation rate is likely to increase further in the next few months and will most likely exceed 5% when Ofgem's limit on energy prices is adjusted later in April," Broadbent said.
On the question of whether the development of the Omicron Covid-19 variant would influence his principles on interest, Broadbent chose not to comment on the matter while emphasizing the vote on interest rates would not be driven by one factor but multiple factors.
He gave details by saying that there was reason to assume the recent surge in inflation for goods, driven by global supply chain issues there is likely to fade. On the other hand, although unemployment is higher than before the epidemic, the job market can still drive inflation mainly due to the lack of job growth.
The sterling recorded a slight strengthening after reviews from Broadbent and UK bond prices eased slightly. The market now expects that the probability of the BoE raising rates from 0.1% to 0.25% on December 16 is 50% due to the recent emergence of the Omicron variant.
