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