The UK has a strong monetary policy framework and the operationally independent Bank of England is responsible for inflation meeting its 2% target. The Bank of England expects the rise in inflation to be temporary, as they set out in the latest minutes of the Monetary Policy Committee, and expect it to return to its 2% target over their latest forecast.
The government’s priority is to continue to invest in the economy to support recovery from the pandemic, whilst also returning the public finances to a sustainable path once the economic recovery is durably underway. The Chancellor has highlighted that at our higher level of debt, the public finances are more vulnerable to changes in inflation and interest rates. That is why at the Budget in March, the government announced fiscal repair measures that take the public finances back toward a sustainable path in the medium term with debt broadly stable and the current budget moving close to balance.