Rise in inflation won’t worry MPC, Brexit mood sours

The unexpected rise in inflation in August came as a bit of a nasty surprise. But we still think that the Monetary Policy Committee (MPC) can afford to sit tight until Brexit uncertainty has been resolved, before raising interest rates again. If the informal EU Summit in Salzburg is anything to go by, though, the MPC will remain in a state of inertia for some time. With the talks souring and the chances of Theresa May pushing any agreement through Parliament still looking as tight as ever, we see no reason to change our assumption that a Brexit deal will only be secured at the eleventh hour.