Bank of England governor Mark Carney told the Treasury Select Committee in Westminster this morning (17 October) that he expects United Kingdom inflation to peak at just more than 3 per cent, in the next two months.
According to the statistics agency, the inflation growth was stimulated by rising prices for food, recreational goods, and transport costs.
Britain's inflation rate hit 3 percent in September, above the BoE's 2 percent target, data published on Tuesday showed. However, the headline inflation move was not matched in the RPI, with the annual rate here holding at 3.9 percent in September, slightly weaker than consensus expectations. But, if there are firmer signs that inflationary pressures are building, then she would be inclined to agree with the rate hiking preference of the BOE majority.
"My view is that we are approaching a tipping pint at which it would be necessary or justified to remove some of that stimulus", she said.
A reversal in the Bank's post-Brexit-vote, quarter percentage point cut in base rate looks nearly certain in November, particularly after news today that the consumer price index (CPI) rose at an annual rate of 3% in September.
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Many economists still remained confident that Carney and co would still hike rates at their coming meeting.
He said the fall in the pound since the Brexit vote was the "sole reason" behind the recent spike in inflation and would probably see it rise over 3% "in the coming weeks", meaning he will "more likely than not" be obliged to write to the Chancellor to explain why. "We expect that inflation will peak in and around the October figure, October-November figures, peaking potentially above the 3% level".
The BoE's net policy meeting is on November 2, and some analysts believe that the interest rate hike could be implemented as early as next month.
At 13:00 GMT the FxWirePro's Hourly Strength Index of British Pound was highly bearish at -166.905, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 47.8029.
Two members of the Bank of England's Monetary Policy Committee have spoken cautiously about the prospect of a rate rise next month.