Annual inflation in the United Kingdom is expected to be 7.25% in April this year, driven by energy prices, said Catherine Mann, a member of the Bank of England’s Monetary Policy Committee (BoE, Tuesday). Event by the Federal Reserve of the Cleveland (Fed, US Central Bank).
For team member Michael Sanders, this effect of energy prices on inflation will be temporary. “It’s going to raise inflation – and slow down real wage growth – for a while.
Therefore, according to him, it does not make sense to tighten monetary policy too much, with the aim of reversing the inflation target of 2% per annum, when the temporary effect of energy prices is at its peak.
“This does not mean that the monetary policy committee has abandoned its commitment to low inflation, but that the temporary effects of inflation cannot be offset by monetary policy,” he said. “The big picture is that energy prices are causing high inflation, the economy is in substantial demand and inflation expectations are not anchored as much as they would like.” , He added.
At the February meeting, Sanders said he was in favor of a 0.5 point interest rate hike. However he acknowledged that their numbers were not enough to defeat President Conte’s government.
According to him, the team has the tools to bring inflation back to the 2% target.
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