Comments by BOE chief economist, Andy Haldane
- High degree of two-sided uncertainty on inflation is understandable
- We might see higher and more sustained rise in UK inflation than expected
- We may potentially overshoot target for a more sustained period
- If economies bounce on vaccine, policy could overstimulate the economy
- In turn, also overstimulate inflation pressures
- But also reasonable to expect disinflationary trends to persist
- Costs to the economy and BOE getting these judgments wrong could be significant
Damned if you do, damned if you don't. That's pretty much Haldane's take here. But at least he is opening the door to the possibility of the BOE looking towards a quicker development in the inflation backdrop.
Then again, that owes much to the fact that the UK is progressing well on the vaccine rollout. So, that needs to be taken into consideration as well.
