UK Prime Minister Sunak Faces Economic Challenges as Bank of England Raises Interest Rates

                                  Courtesy: The Telegraph

As the UK economy continues to recover from the impact of the COVID-19 pandemic, the Bank of England has admitted it was wrong on recession and has upgraded its forecast for the UK economy, with record growth predicted. This positive outlook has been marred, however, by concerns over inflation and the cost of living.

The Bank of England's governor, Andrew Bailey, has warned that The Prime Minister Rishi Sunak will fail to deliver on his promise to keep inflation at or below 2% by the narrowest of margins. Bailey has stated that inflation could rise to 3% by the end of the year, and will likely remain elevated for some time due to a combination of supply chain disruptions and increased demand as the economy reopens.

While the Bank of England's upgraded forecast for the UK economy is undoubtedly positive news, there are concerns over the cost of living for millions of people. Despite the rosier outlook, experts warn that the pain of rising costs is still to come, particularly as energy prices continue to surge.

                                  Courtesy: Sky News

The Bank of England's credibility has also come under scrutiny, with some questioning whether the institution has a credibility issue. In a recent interview, Ed Conway of Sky News asked Bailey if the Bank had a credibility problem, to which Bailey responded that the Bank was committed to transparency and that its forecasts were subject to change based on new data.

To help manage inflation, the Bank of England recently announced that it would be raising interest rates to 4.5%, a move that is expected to slow inflation but also increase borrowing costs for individuals and businesses. However, some experts have expressed concerns that this move could harm the economic recovery, particularly as many businesses are still struggling to recover from the pandemic.

Overall, while the Bank of England's upgraded forecast for the UK economy is a positive development, there are concerns over inflation and the cost of living that must be addressed. With interest rates rising and energy prices continuing to surge, it remains to be seen how the UK economy will fare in the coming months under the leadership of Prime Minister Rishi Sunak.