Last week after raising interest rates across the board by 25 basis points, ECB President Christine Lagarde said the central bank expects to raise interest rates again in July. The eurozone sees a similar inflation threat even as falling energy prices are helping to ease the pressure. He added that the Committee also sees further rate hikes by the end of the year. Wednesday, in his Semiannual Monetary Policy Report to Congress, Federal Reserve Chair Jerome Powell said that the Committee still has a long way to go before inflation is under control. has dropped sharply from its 40-year highs last June but still remains well above the Federal Reserve's 2% target. While the inflation threat in Britain is unique and has been stubbornly high for more than a year, the nation is not alone in its struggles. We will see what the BoE will do and say tomorrow, but we know that they now have a few doubts regarding the reliability of their inflation model, which was pointing at a steep fall in H2 this year – a scenario that is unlikely to happen," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank in a note to clients. “These numbers warn that inflationary pressures in the UK are not under control and call for further rate hikes, which will further squeeze the British households, without a guarantee of easing inflation. Economists have noted that as consumer prices remain elevated, the BoE will have to maintain its hawkish stance longer than anticipated, increasing the risk of the economy falling into a recession. The inflation data comes a day before the Bank of England is expected to raise interest rates. According to consensus estimates, economists were looking for core inflation to remain unchanged at 6.8%. Economists were looking for inflation to rise 8.4%.Īt the same time, core inflation, which strips out volatile food and energy prices, rose 7.1%, coming in hotter than expected. Wednesday, the Office of National Statistics said that headline inflation in the last 12 months rose by 8.7% in May, unchanged from April's increase. shows that inflation remains a global threat. The latest Consumer Price Index numbers from the U.K. ( Kitco News) - Stubborn inflation is forcing central banks worldwide to maintain aggressive monetary policies while this could be a short-term drag on gold, some analysts also note that it supports prices in the long run. Receive a comprehensive recap of the day's top stories directly to your inbox. Get all the essential market news and expert opinions in one place with our daily newsletter.
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