Inflationary pressures ‘would cancel each other out’, says Bank

The Bank of England has stated that differing factors that influence inflation may counterbalance each other in the coming months.

In the latest quarterly inflation report, it was noted that there is likely to be a short-term jump in the consumer prices index rate, due to factors such as the reversion of the VAT rate from 15 per cent to 17.5 per cent.

Members of the Monetary Policy Committee (MPC) were said to differ in their views of which factors would be decisive in influencing future inflationary trends.

But the report concluded: “The risks of inflation being above or below the target are broadly balanced by the end of the forecast period.”

Such a situation could help the MPC to keep interest rates low, which could in turn stop steep rises in the cost of credit cards.

The inflationary report comes at a time when employment statistics have shown some positive signs.

In the three months to September, the number of people in work rose by 6,000 – the first increase in 15 months.

At the same time, the quarter-quarter jump in the unemployment rate was the smallest since May last year.

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