New British Prime Minister Liz Truss faces a confluence of economic challenges, but will need to balance her own ideals with the immediate needs of the country.
's 13.3% projected peak, and the British lender cut its forecast for 2023 CPI inflation from 9% to 5.5%.Monetary Policy Committee may be revisiting its outlook. However, economists were cautious of calling the peak, with some speculating that last month's reading may have been a"fluke" on a broader upward trajectory.
"Indeed, we note that the MPC is even further behind the market-implied terminal rate than when it began its tightening cycle." "Following the announcement of the energy bills support package, we increased our Bank Rate forecasts; we now expect rates to reach 3.5% by year end," AXA's Adegbembo said. Truss was highly critical of what she considered the Bank of England's failure to nip inflation in the bud during her campaign for the Conservative Party leadership, and is reportedly considering a review of its mandate.
Real wages — taking into account inflation — excluding bonuses fell by 2.8% in the three months to the end of July.During her campaign, Truss argued in favor of tax cuts to boost growth and advocated for the controversial theory of"trickle-down" economics. The energy price freeze and broad tax cuts have drawn criticism for disproportionately aiding the country's wealthiest households.