In an article to the Daily Mail, BoE chief economist Andy Haldane said, “with the economy bouncing back, and with inflation risks on the rise, now is the time to start tightening the tap to avoid the risk of a future inflationary flood.”. He voted to “begin throttling back the degree of support provided to the economy” at last week’s MPC meeting. And he emphasized that’s just “gently taking our foot off the accelerator”, rather than, “slamming on the brakes”.
“By the end of this year, inflation is likely to be above its 2 per cent target, largely due to the temporary effects of higher energy prices,” he explained. “At that point, the UK economy is likely to be growing rapidly above its potential. This momentum in the economy, if sustained, will put persistent upward pressure on prices, risking a more protracted – and damaging – period of above-target inflation. This is not a risk that can be left to linger if the inflation genie is not, once again, to escape us.”
