The Bank of England says the Budget will lower inflation by 0.25 percentage points at its peak but push it up later, when temporary cost-of-living help expires, Reuters reports. That is in line with an earlier Reuters poll of economists, which expected the Budget to slightly reduce the rise in inflation.
The Bank also judged that the Budget delivered by the Chancellor, John Healey, gives a small, temporary boost to growth. Alongside its rate rise on 5 November, it revised up its growth forecasts to 1.6% this year and 1.3% next year. It attributed some of the strength to AI spending.
Reuters describes the Bank's forecasts as notably stronger than the OBR's. The OBR forecasts growth of 1.0% in 2027, cut from 1.6%, so the Bank's 1.3% for next year is clearly above it.
The Bank says households' real income from work is set to fall this year and next after inflation and taxes.
Reuters puts the Bank's inflation peak at around 5% in the middle of next year. That is consistent with the 4.9% peak in the second quarter of 2027 reported earlier.