London, Jul 11​​​(EFECOM).- The International Monetary Fund (IMF) considers that inflation is the biggest problem facing the UK economy in the short term, and therefore estimates that the Bank of England will have to keep interest rates high longer than expected can control prices.

In a report concluding the annual review of the UK economy (known as Article IV), the IMF’s Executive Board commended the work of the central bank, which hiked interest rates by half a point on June 22, and recalled the importance of “clear communication”. on monetary policy decisions.

“If inflationary pressures show signs of persistence, interest rates will need to be raised further and must remain high longer to bring inflation down,” the institute said in its statement.

Inflation in the UK held at 8.7% year-on-year for the second straight month in May, indicating more resistance to a decline than analysts had anticipated.

In addition, today it became known that wages increased by 7.3% in the three months ending May, a level considered a “record” by the Office for National Statistics (ONS).

In its latest update on the economic outlook for the United Kingdom, the IMF ruled out that the country will enter a recession, as had been predicted, and raised its GDP growth forecast for this year by 0.4%.

“Growth prospects remain dim. We expect growth to slow to 0.4% in 2023, held back by tighter monetary and fiscal policies needed to curb inflation, and the continuing impact of ‘surprises’ in exchange rates”, he explained, before advancing his predictions growth of 1% for 2024.

Similarly, the IMF highlighted “the need for continued vigilance against risks to financial stability, including in the mortgage and real estate markets.”

The Washington-based entity’s Executive Board also urged UK authorities to closely monitor their banks’ liquidity reserves. EFECOM

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