The Bank of England will need to demonstrate its plans to keep a lid on inflation at its monetary policy meeting this week, economists said, after the central bank failed to forecast the strength of the rebound in prices and growth this year.
Following last week’s move by the US Federal Reserve to publish projections showing it was likely to raise interest rates at least a year earlier than previously thought, all eyes this week are on the BoE to see whether it follows suit.
Pressure is mounting from central bank watchers and internally for the BoE to take a more proactive stance.
George Buckley, chief UK economist at Nomura, said that although he did not expect the central bank to act on Thursday, “the ongoing and sharp rebound in gross domestic product, alongside upside surprises in inflation, cannot be ignored”.
According to Philip Shaw, head of the economics team at Investec, “a US-style situation may be developing, where…