GBP rallies after quarterly inflation report signals further tightening
8 August 2007
GBP rallied in reaction to the quarterly inflation report which highlighted the need for further tightening in interest rates. Even assuming interest rates at 6%, the Bank of England sees CPI in 2 years time slightly above their 2% target and the risks are still to the upside. The inflation report also indicated that inflation would clearly overshoot the target if rates stayed at their current 5.75%.