IMF advises Bank of England to avoid inaction before key meeting

By Ovunc Kutlu

ANKARA (AA) - The International Monetary Fund (IMF) advised the Bank of England on Tuesday to avoid inaction on interest rates amid rising inflation before its key monetary policy meeting.

"Given the shadow of Covid-19/Omicron uncertainty, in choosing the pace policymakers will have to weigh risks," the IMF said in its United Kingdom Staff Concluding Statement of the 2021 Article IV Mission.

Inaction by the Bank of England could continue to raise costs and allow further inflation, according to the international financial institution.

But if it would take early action on interest rates, it could also slow economic recovery, it said.

"It would be important to avoid inaction bias,” the statement said. “Careful communication would be needed to lay the groundwork with markets for potentially more frequent policy moves."

In the UK, annual consumer prices rose 4.2% in October, the highest 12-month inflation rate since November 2011, according to the Office for National Statistics.

Inflation data for November will be released Wednesday, one day before the Bank of England's next meeting.