UK inflation is likely to exceed the two per cent target for the next few years, the Bank of England's chief economist has said.
Andy Haldane’s comments were published in a blog post released today, describing his trip to Manchester on 3 November, a day after the bank decided to raise interest rates for the first time in over a decade to help curb price growth.
“Price rises across the whole economy are currently running well above the two per cent inflation target and are expected to remain above-target for the next few years,” he wrote. Haldane’s comments were in line with the Bank of England’s most recent forecasts.
Inflation data published tomorrow is expected to show the consumer price index accelerated to 3.1 per cent in October. A figure above three per cent would force BoE governor Mark Carney to write to the chancellor of the exchequer explaining why inflation has moved away from the two per cent target and the Bank’s plan to bring it back in line with this goal.
Haldane added that “small adjustments in the cost of borrowing were unlikely to have a significant impact” on the daily lives of most of the people he spoke to.
“The rise in inflation through this year has already generated such a squeeze on many households’ purchasing power. This is not something the Bank, or anyone else, should wish to see continuing for years to come – hence the nudge up in interest rates,” he said.