Bank of England’s inflation response ‘risks higher interest rates for longer’

Thinktank Niesr says timid rate rise last week likely to make inflation more persistent feature of UK economy

The Bank of England is risking higher interest rates for longer after a hesitant response to rising inflation, according to leading thinktank.

In a searing critique of the central bank’s tactics, the National Institute of Economic and Social Research (Niesr) said a timid increase in interest rates last week was likely to mean inflation staying above the Bank’s 2% target until at least 2030.

The thinktank said inflation was likely to become a more persistent feature of the UK economy unless the Bank took tougher action.