RSS Feed
DIGG this story
Businesses warned of future inflation
21/02/2007
The UK economy may suffer in the future as inflation continues to rise, the monetary policy committee (MPC) has claimed.
According to the Bank of England's rate-setting body, the era of relatively low inflation is set to end as the nation embarks on a period of "volatile" economic growth.
In a report issued to acknowledge the ten-year anniversary of the committee, the Bank claimed that "great stability" for the future cannot be guaranteed.
"Moreover, some aspects of the global economy look unsustainable, particularly the pattern of global current account imbalances and the low level of real interest rates and risk premia," the MPC stated.
The committee also suggested that the strength of sterling is set to decline as the nation struggles with the current account deficit.
"At some stage the current account will probably need to close," the MPC asserted. "At that point … some depreciation of the real exchange rate will probably be necessary."
According to the Bank of England's rate-setting body, the era of relatively low inflation is set to end as the nation embarks on a period of "volatile" economic growth.
In a report issued to acknowledge the ten-year anniversary of the committee, the Bank claimed that "great stability" for the future cannot be guaranteed.
"Moreover, some aspects of the global economy look unsustainable, particularly the pattern of global current account imbalances and the low level of real interest rates and risk premia," the MPC stated.
The committee also suggested that the strength of sterling is set to decline as the nation struggles with the current account deficit.
"At some stage the current account will probably need to close," the MPC asserted. "At that point … some depreciation of the real exchange rate will probably be necessary."