The Bank of England (BOE) has defended its decision to upgrade the UK’s growth forecast, which it called its “biggest upgrade” ever. BOE Governor Andrew Bailey said the change reflected the rapidly shifting economic landscape. The bank had previously predicted the longest-ever recession in the country, but now believes that the UK will not enter into recession this year. Bailey acknowledged that the overall forecast remained weak, but insisted that the forecasts are based on conditional data that is subject to frequent and significant fluctuations. He said the BOE deals with all these changes, which is why forecasts change and evolve.
BOE Maintains Commitment to Tackling Price Rises
The BOE has maintained its commitment to tackling price rises, raising interest rates by 25 basis points and taking the main bank rate to 4.5%. The headline consumer price index rose by an annual 10.1% in March, driven by persistently high food and energy bills. Core inflation, which excludes volatile food, energy, alcohol and tobacco prices, increased by 5.7% over the 12 months to March, unchanged from February. Bailey said that he was optimistic of a “rapid” fall in inflation over the coming months. The governor also acknowledged that the bank should do a better job at communicating and emphasized the importance of the wording used when communicating with the public about inflation.
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