LONDON (MNI) – Bank of England Monetary Policy Committee member
Adam Posen has said that the MPC is “actively discussing” the recent
resilience of core CPI and is taking the issue “very seriously”.
March inflation data showed core inflation ticked up to 2.5% from
2.4% in February, the first rise since October 2011. Posen’s concern is
that core inflation seems to be ‘plateauing’ rather than coming down as
forecast.
“The committee is taking this very seriously and we are actively
discussing it,” Posen said in an interview with the Evening Standard
newspaper.
“What is more challenging to my analysis, and more concerning for
the economy, is that core inflation has plateaued for the last three
months rather than trending down,” Posen said.
“The obvious candidates normally for why inflation is up – either
because you’re worried about our credibility or that there is some
underlying price factor – are just not there. If it turns out this is a
short-term hang before it comes down again, great, if it turns out it’s
not, then I and everybody else has to rethink something,” Posen added.
Turning to discuss his decision to pull his vote for more QE at the
MPC’s most recent meeting, Posen said that he always based his vote on
his own set of forecasts for the economy.
“I never was an automatic vote for more QE my votes are always
based on my forecast. By definition, if quantitative easing has the
desired effect to loosen monetary conditions, and I believe it does,
there has to be some amount that is enough to return inflation to our
medium-term target for any set of economic conditions.”
–London newsroom: 4420 7 862 7492; email: wwilkes@marketnews.com
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