© Reuters. FILE PHOTO: The Chief Economist of the Bank of England, Andy Haldane, listens from the audience at an event at the Bank of England in the City of London, London, Britain April 27, 2018. REUTERS/Toby Melville/File Photo
LONDON (Reuters) – Bank of England Chief Economist Andy Haldane said on Wednesday there were already “some pretty punchy pressures on prices” and the central bank might need to turn off the tap of its huge monetary stimulus.
“If both pay, and costs are picking up, inflation on the high street isn’t very far behind. And that’s something, you know, people like me are paid to keep a close eye on and we are,” Haldane said in an interview with LBC radio.
“And that may mean that at some stage we need to start turning off the tap when it comes to the monetary policy support we have been providing over the period of the COVID crisis.”
Haldane, who is due to leave the BoE after its monetary policy meeting later this month, cast a lone Monetary Policy Committee vote in May to reduce the size of the central bank’s bond-buying programme.
He has previously warned of the risk of a jump in inflation as the economy bounces back from its lockdown crash.
Haldane told LBC that there was still a need to encourage households to spend which might be made easier if companies paid their workers more.
Britain’s consumer price index more than doubled to 1.5% in the 12 months to April and the BoE expects it will overtake its 2% target later this year. Governor Andrew Bailey and other senior BoE officials have said the factors driving price growth are likely to prove temporary.
“The risks at the moment for me are that we might overshoot that number for a bit longer than we’ve currently planned,” Haldane said.
Bank of England’s Haldane sees ‘pretty punchy pressures on prices’
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