Bank of England officials warn that the risk of inflation in the UK depends on wage growth
A senior person said that the rapid rise in consumer product prices is unlikely to continue, but UK interest rate makers must pay attention to signs of wage increases, which may lead to more persistent inflation. Bank of England The official said on Thursday.
Ben Broadbent, the deputy governor in charge of monetary policy, admitted that the degree of inflation in the UK is difficult to explain. Although GDP is still well below its pre-crisis level, the average level over the past 18 months is only slightly lower than before the pandemic.
He said that there is a good reason to prove that some of the contributing factors are temporary. In particular, as consumers switch back to service spending and supply bottlenecks ease, the surge in global commodity price inflation should slow down.
Although inflation may rise further in the coming months, an appropriate policy response “is likely to be’to no avail’… if this is just a story about global commodity prices,” he argued.
But he warned that policymakers must “watch very closely.” .. Labor market figures” because inflationary pressures in the domestic economy may be more persistent. With the end of the vacation plan, labor shortages should decrease, but there may still be a mismatch between jobs and available workers in specific places, resulting in companies Pay higher wages.
“We can’t become IT experts overnight. Nor can we easily dismantle an office or restaurant in the city center and transplant it elsewhere,” he said, adding that it’s not clear that the cost of adapting to permanent changes in demand has been The degree to which it is produced or passed on to consumers.
However, Broadbent did not imply that he would support immediate policy tightening.
His cautious comments indicate that the Monetary Policy Committee will have differences of opinion when it meets next month, instead of swinging in the direction of ending quantitative easing early.
In May of this year, the majority of the members of the nine-member committee voted to maintain the Bank of England’s ultra-loose policy stance, although Andy Haldane, now the chief economist, voted against cutting the central bank’s bonds. Purchase plan.
The market is unexpected last week The Bank of England’s deputy governor for markets and banking, Sir David Ramsden, said that it may now be necessary to tighten monetary policy sooner than expected to control inflation.
Michael Saunders, an external member of the committee, agreed, saying that if the economic trend since May continues, “withdrawing from some of the current monetary stimulus measures may soon become appropriate”.
But since then, Jonathan Haskel (Jonathan Haskel), another external member of the Monetary Policy Committee, tempered their views. He said this week that austerity policies may stifle the economic recovery and that it is not the right approach “for now”.
Catherine Mann, who will join the Monetary Policy Committee in September, also warned against premature tightening. She told the Parliamentary Treasury Special Committee this week that the global recovery is more fragile than it seems.