Bank of England rate-setter says he is 'more confident' about UK inflation

Dave Ramsden, is a member of the Bank of England’s interest rate-setting Monetary Policy Committee

A key figure from the Bank of England’s rate-setting panel has expressed growing confidence in the UK’s inflation outlook, suggesting it could stabilise at the target level for an extended period, surpassing the central bank’s own forecasts.

Dave Ramsden highlighted that the UK is shifting from being an “outlier” to a “laggard” in terms of inflation, indicating a gradual alignment with global trends seen in the US and eurozone economies. Fresh figures from the Office for National Statistics (ONS) have revealed that Consumer Prices Index (CPI) inflation dipped to 3.2% in March.

Despite the Bank of England’s February forecast anticipating a return to the 2% CPI inflation target between April and June this year, it also predicted a temporary nature of this stability, with expectations of an increase in the latter half of the year, potentially reaching 2.8% by early 2025.

However, during a speech at the Peterson Institute of International Economics in Washington DC, Mr Ramsden conveyed his increased optimism, stating that recent months have bolstered his belief that the risk of enduring high inflation in the UK is diminishing. He said “For me the balance of domestic risks to the outlook for UK inflation, relative to the February MPR (Monetary Policy Report) forecasts, is now tilted to the downside, with a scenario where inflation stays close to the 2% target over the whole forecast period at least as likely.”

The Bank’s forecast covers the next three years. “This leaves the UK as less of an outlier and more of a laggard in terms of recent inflation performance, and one that is now catching up quickly,” he added.

The Monetary Policy Committee (MPC) will hold its next meeting in May, but it is not anticipated to begin cutting interest rates until later in the summer. After being raised by the Bank of England to combat inflation, rates are currently at a 15-year high of 5.25%.