The Bank of England is making a concerted effort to play down the possibility that it will respond to inflation falling to zero with a fresh cut in interest rates. Three members of Threadneedle Street’s monetary policy committee separately said that they thought inflation – which is likely to turn negative next month – would bounce back soon.
The interventions by deputy governor Minouche Shafik and two of the externally appointed members of the MPC, Kristin Forbes and David Miles, contrast sharply with comments made last week by the Bank’s chief economist, Andy Haldane. Haldane said it was possible that there had been a permanent downward move in inflation and that he could easily envisage cutting rates from their current record low of 0.5%.
But this view was not supported by Shafik, Forbes or Miles, who made their views public before the Bank goes into “purdah” later this week for the duration of the election campaign. All three echoed remarks made recently by the Bank’s governor, Mark Carney, who said it would be “foolish” to cut rates in response to a temporary fall in inflation.
via The Guardian
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.