The Monetary Policy Committee, who voted unanimously to keep interest rates at the historic low of 0.1 percent, has now warned that surging household energy bills could drive inflation above four percent by the end of the year and into the middle of next year. They also downgraded their expectations for Covid recovery, with gross domestic product set to be 2.5 percent below pre-pandemic levels in the third quarter of this year.

       Challenges causing the warning include extra costs associated with the shortage of workers, delays to global supply chains and surging energy prices, and a record rise in wholesale gas costs.

       In a letter to the Chancellor, Rishi Sunak, Governor Andrew Bailey said the economy has been “subject to some of the largest shocks” in centuries and economic activity has been “exceptionally volatile.”

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