Home > Bank of England, Crazy Loons, Monetary Policy > Does the Bank of England Like Inflation? No, no, no.

Does the Bank of England Like Inflation? No, no, no.

This is MPC member Paul Fisher in the Sun:

As a 54-year-old, Mr Fisher jokes he is old enough to recall when inflation was a far bigger problem — hitting 25 PER CENT in the Seventies.“What people have experienced over the last year or so shows why inflation is such a bad thing — and why the bank’s Monetary Policy Committee was set up with dedicated powers to keep it closer to target.”

Their emphasis.  Inflation is “such a bad thing”!  Get the message?

OK, it is more than likely the Sun have mangled Mr Fisher’s original words beyond recognition.  So over to MPC member Paul Tucker, speaking to Euroweek:

A provision in our mandate that we have used actively is that we aim to achieve 2% inflation in the medium term, but if inflation gets pushed away from target by, say, oil price movements, we don’t have to get inflation back to target immediately because that would risk undesirable volatility in output and unemployment. We don’t have to create recessions to get inflation back to target quickly in the event of an oil price hike.

Great news.  The MPC don’t have to create recessions to get inflation back to target!  Obviously it was jolly bad luck that we had a recession when the oil price shock in 2008 sent inflation up to 5%.  And jolly bad luck that we had a recession when the oil (plus VAT) price shock in 2011 sent inflation up to 5%.  I’m sure that’s just a co-incidence, though.
Does Mr Tucker think they should do more QE now?
EUROWEEK: How much fuel is there left in the QE tank?

Tucker: Technically we could do more. It’s just a question of what we think the risk to inflation would be.
That’d be a “no”, let’s ignore the neverending depression, so long as we keep inflation down, everything is just fine.
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