–BOE Fisher: Inflation is 4%, Very Uncomfortable
–BOE Fisher: Past Policy Decisions Determining Inflation Now
–BOE Fisher: MPC Has To Look Through Short Term Effects

LONDON (MNI) – Inflation is uncomfortably high but the Bank of
England’s Monetary Policy Committee has to look through short-term
effects and accept unpopularity, Executive Director Markets Paul Fisher
said in an interview with the Yorkshire Post newspaper.

Fisher said the current high inflation was due to short-term
factors and he would not want to go back and reverse previous policy
decisions. The BOE MPC is coming under increasing criticism over the
relatively high and persistent levels of inflation, but Fisher said the
committee must focus on the medium-term outlook.

“The decisions we took through 2009 are the ones that are
determining the inflation rate now. Nobody so far has said we should
have had tighter policy through 2009. That was a period when output was
falling, we were trying to bring the recession to an end,” Fisher said.

“Yes it’s very uncomfortable, inflation is 4% now, but I wouldn’t
want to go back and change policy,” he added.

It is not clear what the “4%” inflation quote referred to. In
November CPI annual inflation stood at 3.3%, with RPI and RPIX up 4.7%.
The December consumer price data are due for release at 0930 GMT, with
analysts’ median forecast for a 3.4% outturn for CPI.

“We have to look through those short-term things, despite what ever
unpopularity comes our way,” Fisher said.

The BOE Executive highlighted continuing downside risks, and did
not rule out a quarter of negative growth.

“There are risks around everywhere… but I am reasonably
optimistic about the UK’s own position,” he said.

He said a quarter of negative growth, while possible, was not the
most likely scenario.

Fisher warned that the eurozone debt crisis could impact UK banks
but said “People have been content with the UK’s financial position,
with the UK banks so we are not the focus of attention,”

“The most important thing was, we have some form of fiscal
consolidation in which the markets have credibility. We have got that,”
Fisher said.

–London bureau: +4420 7862 7491; email: wwilkes@marketnews.com
drobinson@marketnews.com

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