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2026-09-17 19:34:10
[The UK need not rush to raise interest rates; fiscal policy is the greater risk] (1) David Rees, global head of economics at Schroders, said that domestic inflation in the UK has been brought under control, wage growth is slowing, and the unemployment rate of nearly 5% indicates significant spare capacity in the labor market. (2) He believes that the current economic situation does not urgently require the central bank to raise interest rates. (3) The greater risk lies in fiscal policy, and the October budget will be crucial. (4) A large increase in spending could reignite domestic inflationary pressures and prompt an earlier interest rate hike; however, the pressure already evident in the UK bond market should reduce the likelihood of implementing inflationary fiscal expansion. (5) Currently, the Bank of England still has room to ignore the temporary rise in overall inflation caused by rising energy prices.
