- Expects inflation to fall further
- Conditions in Eurozone more deflationary than UK
- Not impossible that the falls in energy and food prices could infect other sectors
- BOE has tools to deal with risk of deflation
- Could keep rates at record low for a bit longer if needed, rather than more QE
And that headline is the one that matters, and a point I’ve been making constantly, that central banks want rates higher. Even the last comment that rates could be kept lower for longer doesn’t rule out rises, it just means that rate would go up more gradually.
More from Carney;
- December CPI data was lower than BOE expected
- Expects CPI to drift down in coming months
- Current outlook suggests that CPI should return to target within 2 years
- BOE has ability to get inflation back to target
- Will look closely at household and market inflation expectations
- Pace of rate rises is likely to be more limited and gradual than expected a year ago
