Haldane Says U.K. Inflation to Exceed Target for Next Few Years

A shopper carries bags while walking along on Oxford Street in central London, U.K., on Tuesday, Nov. 7, 2017. U.K. retail sales fell the most in seven months in October, indicating continued caution among consumers just weeks before the crucial Christmas shopping season. Photographer: Luke MacGregor/Bloomberg

U.K. inflation is likely to remain above target for the next few years, according to the Bank of England chief economist.

Andy Haldane’s comments, in line with the BOE’s most recent forecasts, came in a blog post published on Monday describing his trip to Manchester on Nov. 3 , a day after the bank lifted interest rates to help curb price growth.

A report Tuesday is forecast by economists to show inflation accelerated to 3.1 percent in October, a level which will require BOE governor Mark Carney to write to the Chancellor of the Exchequer about how policy makers will respond.

“Price rises across the whole economy are currently running well above the 2 percent inflation target and are expected to remain above-target for the next few years,” Haldane wrote.

He added that this was why the BOE tightened policy this month and that “small adjustments” to interest rates were “unlikely to have a significant impact” on the daily lives on most people he spoke to.

“The rise in inflation through this year has already generated such a squeeze on many households’ purchasing power,” he said. “This is not something the bank, or anyone else, should wish to see continuing for years to come –- hence the nudge up in interest rates.”

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