BoE’s Pill: Weak UK activity isn’t putting much downside pressure on inflation

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BoE’s Pill: Weak UK activity isn’t putting much downside pressure on inflation

Bank of England (BoE) Chief Economist and Monetary Policy Committee (MPC) member Huw Pill gave talking points while participating in a panel discussion at the Annual National Association for Business Economics Economic Policy Conference, in Washington DC late Friday. 

The panel discussion is titled “Perspectives on Global Monetary Policy”.

Key highlights

BoE has good news on headline inflation, but needs to take a look at persistent components.
UK labor market remains tight, driven by both weak supply and strong demand.
The economic situation in the UK looks “a little less benign” than in the US.
Services inflation in particular remains a reason for concern.
Only modest evidence of a reversion in inflation.
Recession is not necessarily forcing down inflation.
Plenty of reasons for caution over trajectory of inflation, need to see further easing of wage pressures.
BoE will need several months of data before being convinced persistent inflation is gone.

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