Former Bank of England Chief Economist Andy Haldane predicts that inflation will fall significantly in the next six months and advises interest rate setters to consider pausing further increases in borrowing costs.
In an interview with Sky News on Sunday, Haldane, who left the Bank in 2021, believes that inflation could drop to 3-5% due to an expected slowdown in energy price increases.
Despite the Bank raising interest rates to 4.25% at the end of March, Haldane warns that the effects have not yet fully impacted borrowers, especially those on fixed-rate mortgages.
In the Sky interview, he suggests pausing rate hikes to prevent compounding the burden on businesses and households.
Financial markets predict an 88% chance of another rate increase to 4.5% in May, but some economists believe that could be the last hike in the current cycle. Haldane also emphasized the need to accelerate the UK's GDP growth and address skilled worker shortages.