Schroders global head of economics David Rees said UK inflation is under
control, wage growth is slowing and unemployment near 5% implies substantial
spare labor capacity, so current conditions do not necessitate an immediate
Bank of England rate rise. He warned fiscal policy is the bigger risk: October’s
budget is pivotal — a large spending package could rekindle domestic inflation
and bring forward tightening, though existing pressure in the UK gilt market
should reduce the likelihood of inflationary fiscal expansion. The Bank still
has scope to look through a temporary headline inflation uptick driven by higher
energy prices.
