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

Violet Tucker
October 18, 2017

According to data released by the Office for National Statistics (ONS) on Tuesday (17 October), inflation as measured by the Consumer Price Index (CPI) rose 3% year-on-year last month, compared with the 2.9% growth recorded in September and in line with analysts' expectations.

Ramsden said: "Despite continued robust growth in employment, there is no sign of second-round effects onto wages from higher recent inflation".

Facing questions from the Treasury Select Committee in Westminster on Tuesday morning, when inflation was confirmed to have surged to 3%, Dave Ramsden said he was not part of the majority of MPC members who believe a rate hike is likely to be needed "in the coming months" as he suggested inflation pressures will begin to ease.

The annual consumer price inflation of United Kingdom continued to accelerate in September.

Inflation rate climbs to 3%. Inflation has actually trebled in the year from September 2016, when inflation was just 1%.

Meanwhile, the price of clothing and footwear declined, albeit less than it did 12 months ago, while air fares fell more than a year earlier, despite Ryanair cancelling flights.

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The Bank governor is required to write to the Chancellor, Philip Hammond, if inflation moves more than one per cent above the 2 per cent target level.

The governor would not be drawn on the likelihood of interest rates rising in November, but said the challenge the central bank faces is to strike a balance between putting rates up to ease inflationary pressure in the economy, and keeping monetary policy loose to aide the economy in times of economic strife.

"Not raising rates now, having led the markets up the garden path on several occasions over the years would be as equally damaging to the banks credibility".

Mr Carney said it is "more likely than not" that he will be writing such a letter in the coming months.

"Life is getting much more expensive with an increase in the cost of food, fuel and a last-minute price spike in flights all contributing to the rise in inflation", said Maike Currie, investment director for personal investing at Fidelity International.

Other reports by Guamnewswatch

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