It its latest Inflation Report the Bank of England revealed output will be flat thorugh the year and inflation will continue to rise. It also admitted that inflation will peak at 5 per cent in the coming months.
The Bank revealed yesterday that inflation currently sits at 4.4 per cent, the highest annual rate rise in 16 years, according to the Office of National Statistics.
The bleak outlook did not deny that a recession was on the way, only revealing that the Monetary Policy Committee judged the balance of risks to be on the downside.
The reported vowed that the MPC will continue to fight inflation, which could mean Base Rate rises in the near future. Coupled with a predicted squeeze on take-home pay, this spells more misery for many homeowners struggling with mortgage repayments.
Bank of England governor Mervyn King says: “The adjustment of the UK economy…will be painful. The next year will be a difficult one.”