BoE Chief Says Inflation Likely To Remain Persistent
(RTTNews) - Bank of England Governor Andrew Bailey said he is concerned about the continued persistence of inflation but forecast the rate to ease sharply this year.
At the Treasury Select Committee hearing, Bailey said policymakers are concerned about persistence of inflation. That is why the monetary policy committee raised the interest rate. Nonetheless, the governor said inflation will come down rapidly this year.
Last week, the BoE raised its benchmark rate by a half percentage point citing stronger-than-expected wage growth but softened its stance on future tightening. The bank rate was lifted to 4.00 percent, the highest since 2008.
In the monetary policy report, the bank said inflation is seen falling to around 4 percent towards the end of this year and to hit the 2 percent target sustainably in the medium term.
At the hearing, Jonathan Haskel, the external member of MPC said he noticed more persistent inflationary pressures and wished to act forcefully.
"Economic theory suggests that uncertainty around the persistence of inflation should be met with more forceful action, and so I shall remain alert to indications that inflation is more persistent than we expected, and act forcefully if necessary," Haskel added.
"Returning inflation to target in a sustainable manner requires that the MPC continues to be watchful for signs of greater persistence in inflationary pressures than is embodied in our baseline forecast," BoE Chief Economist Huw Pill said.
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