BOE Seems Unconvinced of Persistent Inflation Risks

Dow Jones
07/30

1132 GMT - The Bank of England remains in wait-and-see mode given limited evidence of second-round inflation effects from the energy crisis, says George Brown at Schroders in a note. The BOE held interest rates at 3.75% on Thursday, as expected. "Despite the sharp rise in energy prices, the majority appear unconvinced this will translate into more persistent domestic inflation," he says. Wage pressures in the labor market appear weaker than expected in the face of the external energy shock, Brown notes. "That should limit the risk of second-round effects becoming embedded and, in our view, mean the bank can remain on hold for the foreseeable future," he says.

 

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