Fri, Feb 03, 2023 @ 17:23 GMT
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BoE Pill: Distinctive context prevails in UK creates the potential for more persistent inflation

BoE Chief Economist Huw Pill said in a speech that the central bank’s communication “rightly places the persistence of inflation at centre-stage”.

“Given the famous ‘long and variable lags’ in monetary policy transmission, it is the persistent component of inflation – that component of inflation that will still be there once the lags in monetary policy transmission unwind – that is the relevant object for the MPC’s attention,” he said.

He also noted, “the distinctive context that prevails in the UK – of higher natural gas prices with a tight labour market, adverse labour supply developments and goods market bottlenecks – creates the potential for inflation to prove more persistent.”

“It is therefore in this nexus that I focus in coming to my own assessment of the risks surrounding inflation persistence, which – consistent with the MPC’s collective communication – will strongly influence my monetary policy position in the coming months.”

Full speech here.

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