The chief economist of the Bank of England, Huw Pill, has indicated that inflation, after reaching a crucial juncture, is expected to decline, signalling an end to the series of 12 consecutive interest rate increases.
Pill suggests that the inflation rate will start to decrease as the significant energy price hikes from the previous year no longer influence the calculations.
He also predicts a weakening of domestic demand in the economy as homeowners begin to feel the effects of increased borrowing costs once their fixed-rate agreements conclude.
These statements were made following the Bank of England’s decision to increase interest rates by 0.25% to 4.5% on Thursday, the highest it has been since October 2008.
Simultaneously, the Bank significantly revised its growth forecast for the UK economy, marking a historic increase.
Pill, who expressed last month that UK residents need to come to terms with their diminishing wealth, stated that the key issue is determining whether the anticipated slowdown in demand will be enough to return inflation to its target level.
In other economic news, food prices increased at the fastest pace in over 45 years as of March, as reported by the Office for National Statistics.
