Newspaper article The Journal (Newcastle, England)

Bank Governor Cautious over Inflation Fall

Newspaper article The Journal (Newcastle, England)

Bank Governor Cautious over Inflation Fall

Article excerpt

BANK of England governor Mark Carney has said that the fall in inflation to 0.5% was "good news in the short term for British households" but acknowledged the dangers that could be posed by it turning negative.

He said that interest rates were still on course to rise over the next couple of years despite the drop in the Consumer Price Index (CPI) measure to a record low.

But he said that any rate hikes would be more gradual and more limited than had been expected a year ago. Mr Carney maintained that the Bank had the ability to bring inflation back up to its 2% target within a couple of years.

But he broadly indicated that the tool to achieve this would be cutting the pace and scale of interest rate rises rather than any more money-printing quantitative easing (QE) stimulus - which is widely expected to be launched in the eurozone.

Mr Carney said: "By and large these figures are good news in the short term for British households.

"It's largely caused by lower petrol prices and lower food prices. …

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