“Bank of England Governor Mervyn King said Britain faces a further bout of inflation and a muted economic recovery, and pledged officials will look through the volatility in prices to keep nurturing growth where they can.
“Inflation is likely to rise further in the near term and may remain above the 2 percent target for the next two years,” King said as he presented the central bank’s Inflation Report in London today. “The MPC’s remit is to deliver price stability in the medium term in a way that avoids undesirable volatility in output in the short run. The prospect of a further prolonged period of above-target inflation must therefore be considered alongside the weakness of the real economy.”
The pound fell as King spoke on the dilemma of a weak recovery and above-target inflation that has plagued the Monetary Policy Committee for more than three years and is set to overshadow the last few months of his tenure. The BOE said today it sees inflation at about 2.3 percent at the end of its two-year forecast period, and a “slow and sustained” recovery.
“If necessary, we will do more,” King told reporters today. “We must recognize, however, that there are limits to what can be achieved via general monetary stimulus — in any form — on its own.”
The pound was down almost 0.6 percent against the dollar at $1.5570 as of 12:02 p.m. in London.
Inflation Outlook
In its Inflation Report, the BOE said the outlook for consumer-price growth is higher than forecast in November because of the weaker pound and increases in energy bills. It also warned that weak productivity is boosting domestic cost pressures….”
If you enjoy the content at iBankCoin, please follow us on Twitter
