CBI responds to the latest Bank of England interest rate decision

Anna Leach, Deputy Chief Economist, said:

"With inflation having come down quicker than expected in June, the pressure was eased on the MPC to deliver another bumper rate rise. But, with inflation close to 8% – quadruple the Bank’s target – and wage growth around 7%, interest rates are likely to head higher in coming months.

Economic conditions remain challenging for households and businesses alike. For firms, the cost of inputs is a third higher than pre-pandemic, the labour market remains very tight driving up wage and recruitment costs, and demand is sluggish. Meanwhile real incomes are still falling for households and higher interest rates are squeezing spending power further. To drive up growth and living standards in the UK without generating inflation, we need investment to increase the productive capacity of the economy. Improvements in the tax and regulatory system – as recommended in our recently published tax roadmap and green growth reports – can provide a platform for transforming the UK economy".