BOE - MPC sees Inflation peak in late 2022

The Bank of England voted 7-2 to raise the Bank Rate by 75bp to 3.00% in the November decision.

• This was based upon the assumption of continued, smoothed fiscal support extending beyond the expiration of the Energy Price Guarantee in March.
• Inflation is now seen peaking at 10.9% in Q3, still underpinned by stronger than projected services and wage price growth. Risks remain skewed to the upside.
• Real post-tax household income is forecast to fall by 0.25% in 2022 and by 1.5% in 2023 and LFS unemployment is seen rising to 6.4% at the end of 2025, from around 3.5% at present. 
• The BOE anticipates the EPF will provide support to growth, although slowing spending due to high energy prices and tight financial conditions will underpin projections of falling GDP from H2 2022 through to Q1 2024. Compared to previous forecasts, this is a shallower trough over a longer period. Growth risks remain balanced and the Bank continues to see substantial excess demand in the economy.