The outgoing deputy governor of the Bank of England said that low and stable inflation expectations are valuable and should be protected.
“Credibility is not to be taken for granted. Even we cannot provide stimulus without limit, without a wary eye to inflation expectations,” he told the Association for Financial Markets in Europe yesterday.
Consumer price inflation has reached as high as 5.2 per cent in recent years, well above the Bank of England’s official two per cent target.
Tucker also argued the global crisis has entered a new stage.
“As differences in the relative pace of recovery in different economies become apparent, each central bank is having to articulate how it sees the particular conditions it faces,” he said. “Contrast that with 2011 and 2012 when central banks acted more or less in unison to contain, as best we could, the spillovers from the crisis in the Eurozone periphery.”