THE Bank of England’s Monetary Policy Committee (MPC) at its meeting ending on 1 February 2023, voted by a majority of 7-2 to increase the Bank Rate by 0.5 percentage points, to 4%. Two members preferred to maintain the Bank Rate at 3.5%.
Its statement admitted: ‘UK domestic inflationary pressures have been firmer than expected.
‘Both private sector regular pay growth and services CPI inflation have been notably higher than forecast in the November Monetary Policy Report.
‘The labour market remains tight by historical standards, although it has started to loosen and some survey indicators of wage growth have eased, alongside a gradual decline in underlying output.’
It continued: ‘There are considerable uncertainties around this medium-term outlook, and the Committee continues to judge that the risks to inflation are skewed significantly to the upside.’
It added: ‘The MPC’s remit is clear that the inflation target applies at all times, reflecting the primacy of price stability in the UK monetary policy framework.’
It warned: ‘The framework recognises that there will be occasions when inflation will depart from the target as a result of shocks and disturbances.
‘The economy has been subject to a sequence of very large and overlapping shocks. Monetary policy will ensure that, as the adjustment to these shocks continues, CPI inflation will return to the 2% target sustainably in the medium term.
‘Monetary policy is also acting to ensure that longer-term inflation expectations are anchored at the 2% target.’
It continued: ‘The Committee has voted to increase Bank Rate by 0.5 percentage points, to 4%, at this meeting.
‘However, the labour market remains tight and domestic price and wage pressures have been stronger than expected, suggesting risks of greater persistence in underlying inflation.
‘The extent to which domestic inflationary pressures ease will depend on the evolution of the economy, including the impact of the significant increases in Bank Rate so far.
‘There are considerable uncertainties around the outlook. The MPC will continue to monitor closely indications of persistent inflationary pressures, including the tightness of labour market conditions and the behaviour of wage growth and services inflation.
‘If there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required.’
The Bank’s decision to raise rates will send the UK economy into a deeper recession and gives the go-ahead to employers to allow inflation to cut wages, while using anti-unions laws to curb the struggle of workers for wage rises to compensate for inflation.
Workers are however determined to defend their living standards and will get rid of UK capitalism and go forward to a workers government and a socialist nationalised and planned economy to maintain them.
