Bank of England chief economist Andy Haldane will today invoke doves and tigers as he warns that expectations of very low inflation in Britain could become entrenched.
Haldane likened controlling inflation to taming a tiger.
He added that while it looked as though central banks had succeeded, declining inflation expectations in many countries showed the tiger was capable of “biting back”.
In a speech at the Royal College of Medicine, Haldane will note that inflation expectations have been falling in Japan, as well as the Eurozone and, to a lesser extent, the US. And although inflation expectations in Britain had held up well by comparison, Haldane said he had seen signs the “tiger has stirred” in Britain.
“Even in the UK, some measures of household inflation expectations have fallen slightly over the course of this year,” he said.
“Wearing my Monetary Policy Committee hat, and with UK inflation already below target, this is something I am watching like a dove.”
Inflation hit a five-year low in September, falling to 1.2 per cent from 1.5 per cent in August -- well below the Bank of England’s two per cent target.