BOE Carney Says Low Inflation is Temporary

The Bank of England governor says low inflation is temporary and will return to its 2% target within two years.

“What’s important is that workers and businesses understand this is a temporary phenomenon,” Mark Carney told MPs.

He said the nine-strong Monetary Policy Committee would “bring it back to the target in a reasonable horizon”, which he said would be within two years.

Inflation stood at 0.3% in January, well below the Bank’s 2% target.

The figure marks the lowest rate of UK Consumer Prices Index inflation since estimates of the measure began in 1988.

Mr Carney said that three-quarters of the current weakness in inflation was due to falling prices of oil and food, which he said was a “temporary, one-off development”.

He also said there was no evidence of “deferred consumption” – in other words, people putting off purchases in the belief that prices could fall further, a potential threat to economic growth.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza