LONDON (MNI) – Inflation in the United Kingdom is likely to remain
“stubbornly high” in coming months before moving back towards target in
2011, a leading Bank of England policymaker said Wednesday.
“I am particularly concerned about inflationary pressures, since it
is our job [on the MPC] to keep the rate close to the 2% target and it
is uncomfortably above that at present,” Monetary Policy Committee
member David Miles told the East Anglia Daily Times.
Miles, seen as one of the leading doves on the MPC, said CPI
inflation was likely to remain close to 3% “for a good few months yet,”
particularly in light of the planned VAT hike due in January 2011.
However, he was confident inflation would be moving back toward
target by the end of 2011.
“By the end of next year, however, and going into 2012, it is more
likely that inflation would ease back close to the 2% target, or even
dip a little below it,” he told the EADT.
Like most policymakers, Miles continues to see excess capacity in
the U.K. economy, which is helping to keep inflation pressures somewhat
checked.
“I think it is likely that there is a lot of spare capacity in the
UK and that would keep inflationary pressure in check but there is a
great deal of uncertainty about that,” he said.
–London newsroom 0044 20 7862 7499; email: ukeditorial@marketnews.com
[TOPICS: M$$BE$,MT$$$$]
