Bank of England Policymaker Warns of Rising Inflation Risk
Dave Ramsden, the Bank of England’s deputy governor for markets and banking, has cautioned that the UK economy faces increased uncertainty, driven by rising inflation and weak economic growth. Speaking in South Africa, Ramsden emphasized the need for a “gradual and careful” approach to rate cuts.¹
The Bank of England recently cut interest rates to 4.5% in February, but the prospect of further rate cuts has diminished following higher-than-expected inflation figures. The core rate of inflation rose to 3% in January, up from 2.5% in December.
Ramsden highlighted the challenges posed by rising inflation, particularly in the context of weak economic growth. He noted that earnings growth has hit an eight-month high, with regular pay growth reaching 5.9% in the three months to December. This upward trend in wages could potentially hinder the Bank’s efforts to meet its 2% inflation target.
The Bank of England’s cautious approach to monetary policy reflects the uncertain economic outlook. Ramsden’s comments suggest that the Bank is prepared to adapt its approach as circumstances evolve, balancing the need to control inflation with the risk of exacerbating economic weakness.
