UK Inflation To Hit 3.9% In Early 2022, NIESR Forecasts

• British consumer price inflation will reach 3.9% early next year, almost double the Bank of England's target, but should fall back to 2% the year after if the BoE begins to raise interest rates, a leading think tank forecast on Monday. 
• The National Institute of Economic and Social Research (NIESR) also revised up its growth forecast for 2021 by 1.1 percentage points to 6.8% - broadly in with the most recent forecasts from the BoE and the International Monetary Fund. 
• A sharp rise in oil prices and bottlenecks in supply chains have pushed up inflation in Britain and most other Western economies, with NIESR's forecast suggesting British inflation is on course to hit its highest since late 2011. 
• “To prevent a possible dislodging of inflation expectations, the Monetary Policy Committee should prepare the ground for normalizing its monetary policy stance, and this involves clearly communicating how Bank rate and asset purchases will be adjusted in response to higher inflation," NIESR Deputy Director Hande Kucuk said. 
• The BoE will set out new growth and inflation forecasts on Thursday, and many economists expect it to update guidance about when it might consider beginning to reverse quantitative easing bond purchases.

(Source: Reuters)