LONDON (Reuters) – Bank of England Chief Economist Andy Haldane said the central bank’s new forecast that inflation will breach 3% could prove too low and price pressure could accelerate not only this year but in 2022 as well.
Haldane, who cast the lone vote in favour of for scaling back the BoE’s bond-buying programme at his last monetary policy meeting this week, told MoneyWeek magazine that he disagreed with his colleagues about when inflation would start to ease.
“I am of the view that it could stick around for a bit longer and… therefore we could be in for a breach of our 2% inflation target for a somewhat lengthier period than we are currently factoring in,” he said.
Britain’s consumer price inflation hit 2.1% in May, adding to worries about a global pickup in inflation that could force central banks to reverse their emergency coronavirus stimulus programmes earlier than previously thought.
The BoE said on Thursday that its policymakers now expected British inflation to peak above 3%, up from a previous estimate of 2.5% but most of them thought the acceleration would be temporary and their stimulus remained necessary for now.
Haldane, who leaves the BoE later this month, told MoneyWeek in a podcast interview that as well as a wide range of input costs for companies, wages were also rising.
“Next year could see price pressures building not abating,” he said.
(Writing by William Schomberg. Editing by Andrew MacAskill)
