Mark Carney has warned interest rates may rise earlier than the City expects, despite Bank of England expectations that inflation will turn negative for the first time in more than half a century.
The slump in oil prices and falling food prices is likely to push inflation to zero in the second and third quarters, probably dipping into negative territory for one or two months in the spring, the Bank said in its February inflation report.
However, Carney, the Bank’s governor, said negative inflation in the UK would not lead to the dangerous deflationary spiral feared in the eurozone.
UK inflation was 0.5% in December, well below the Bank’s 2% target. The last time headline inflation was negative in Britain was March 1960, according to the closest comparable data from the Office for National Statistics.
via The Guardian