» UK: BoE Sees Inflation Above Target For Longer? Decision Economics

UK: BoE Sees Inflation Above Target For Longer?

Posted February 13, 2013 by rvillareal

  • The latest (February) BoE Inflation Report provided rationale for the MPC decision this month not to extend its asset purchases. Indeed, unlike previous reports, inflation is seen remaining above target through the crucial two-year forecast horizon.[private]
  • Governor King used his press conference to underline that any attempt to bring inflation back to target sooner by removing the current policy stimulus would risk derailing the recovery and undershooting the inflation target in the medium term.
  • The BoE therefore judged that its policy stance was fully consistent with its remit, also meaning that it stood ready to provide additional monetary stimulus if warranted. Admittedly, not all the MPC may take this view.
  • DE View: Even so, further stimulus is unlikely from the BoE for reasons over and beyond the inflation overshoot.

BoE Feb 13[/private]