- June 30, 2021
- Posted by: Stratford Team
- Category: Business
Andy Haldane, the departing chief economist of the Bank of England, has warned that central bankers need to act to keep inflation in check before the ‘cat is out of the bag’.
In a speech released on his final day at the Bank, Haldane predicts that by the end of this year, UK inflation will be “nearer 4% than 3%” — which would be rather higher than the BoE’s target of 2%, and up from 2.1% last month.
This would increases the chances of a high inflation narrative becoming the dominant one, Haldane warns, forcing banks to tighten policy faster than expected.
This would leave monetary policy needing to play catch-up to re-anchor inflation expectations through materially larger and/or faster interest rate rises than are currently expected.
And in a conversation with the Institute for Government, Haldane warned that if policymakers ignore inflation for too long, it will require a sharper-than-expected rise in…