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The Bank of England set nerves jangling about rising inflation today as it admitted soaring gas prices and supply chain problems will add to the pressures.
The latest report by the Monetary Policy Committee said CPI inflation is now expected to be 'slightly above' 4 per cent in the fourth quarter of the year.
Although the surge is still expected to be 'transitory', it warned that developments over the past month - including the energy crisis - have 'strengthened' the view that action will be need to return to the target of 2 per cent.
The rate could remain above 4 per cent into the second quarter of next year, the committee said.
Bank staff have also revised down their expectations for the recovery, with GDP still set to be 2.5 per cent below its pre-Covid level in the third quarter of this year.
The MPC kept interest rates on hold at 0.1 per cent and the quantitative
