Could services sector inflation make a Bank of England hike more likely?
Thomas Pugh (pictured right), economist at RSM UK, said the economy was "holding up well" even as input costs surged, making further tightening more probable if current trends persisted.
"For the Bank of England, rising inflation indicators along with resilient output balances, if they are maintained over the next few months, makes future rate hikes more likely," Pugh said.
"Everything depends on how energy prices move going forward, but we still think the ultimate impact of the crisis will be a rising unemployment rate and weaker economic growth, which means any tightening cycle will be short and shallow. But clearly, the risk of rate hikes is rising."
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