- Despite slowing inflation, economists expect a busy year for monetary policy with more rate hikes ahead
- Things could be far quieter on the fiscal policy front
We hardly need reminding, but last year proved frenzied on the economic policy front: the UK cycled through four chancellors, three prime ministers and endured eight interest rate hikes. Surely 2023 will be quieter?
First to monetary policy. On the plus side, inflation has fallen for two consecutive months for the first time since the pandemic (dropping to 10.5 per cent in December, from 10.7 per cent in November and 11.1 per cent in October, as the chart shows). Despite this, it remains far above the monetary policy committee’s (MPC) 2 per cent target, and the committee is expected to raise rates by a further 50 basis points (bps) when they meet again next week.