13 Jan 2015
Mark Carney expects UK inflation to fall further
FXStreet (London) - Speaking to the BBC, Bank of England governor Mark Carney said he expects inflation to fall further than today’s 0.5 percent CPI print with declining global fuel prices filtering down to the petrol pump and the inflation outlook looking “a little softer”.
Echoing his December statement that the current declines in price levels were an “unambiguous net positive” he said that continuing declines in reduced food and energy prices are an economic stimulus, boosting spending power.
Carney was quick to differentiate the declining UK inflation levels from those being experienced in the Eurozone where high unemployment rate, stagnant wages and weak consumption are dragging on prices.
However, Carney added that it was not impossible that current declines in food and energy prices could creep into other areas of the economy and that the BoE has the tools at its disposal to nudge prices back to its 2 percent target.
Should price levels remain subdues then Carney is likely to hold rates low for longer, but he stressed that the BoE still expected to "normalise" interest rates within the foreseeable future.
Echoing his December statement that the current declines in price levels were an “unambiguous net positive” he said that continuing declines in reduced food and energy prices are an economic stimulus, boosting spending power.
Carney was quick to differentiate the declining UK inflation levels from those being experienced in the Eurozone where high unemployment rate, stagnant wages and weak consumption are dragging on prices.
However, Carney added that it was not impossible that current declines in food and energy prices could creep into other areas of the economy and that the BoE has the tools at its disposal to nudge prices back to its 2 percent target.
Should price levels remain subdues then Carney is likely to hold rates low for longer, but he stressed that the BoE still expected to "normalise" interest rates within the foreseeable future.