UK annual inflation is expected to be 7.25% in April this year, which is being pressured by energy prices, Catherine Mann, a member of the Bank of England’s Monetary Policy Committee (BoE), told the Cleveland Federal Reserve at an event yesterday.
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 significant demand and inflation expectations are not anchored as much as they would like,” he added.
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