The Bank of England has voted to keep interest rates at 0.25% today. Currently, the policies of low rates and quantitative easing are designed to keep households and businesses borrowing.
The inflation report from 11th May and newly released data provide further evidence that the UK economy is increasingly unbalanced. The Bank of England has warned that wages are stagnating, while everyday prices are rising, leading to a higher cost of living.
Most recent figures suggest that consumer prices are increasing, while average wages are stagnating – meaning that people across the country are facing higher costs of living. To finance higher costs of living, more and more people are borrowing.
The Bank of England revealed today that it forecasts inflation to rise to 2.8%, well above its 2% target. The combination of rising prices, stagnating incomes and slowing employment growth is bad news for households, as they face a higher cost of living across the board.