Bank of England (BoE) Monetary Policy Committee (MPC) member and Deputy Governor for Financial Stability, Sarah Breeden, stated on Tuesday that she believes the recent "bump" in inflation won't lead to further, long-term inflationary pressures.
However, Breeden warned that consumer-level inflation expectations have risen dramatically, and is a cause for concern.
The recent "hump" in inflation is unlikely to lead to additional inflationary pressure.
Underlying disinflationary process looks to be on track but policymakers face a balancing act.
Significant rise in household inflation expectations since the recent lows in 2024 has given me some pause for thought.
If expectations were to continue to rise with further increases in food prices, this could be a cause for concern.
Risks in holding policy too tight for too long, could pull inflation below target.
Source: Fxstreet
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