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13 Mar 2015
‘A gently rising path for Bank Rate is likely to be required over the next few years’ – BOE’s Carney
FXStreet (Mumbai) - Bank of England (BoE) Governor Mark Carney said during his speech today at the University of Sheffield Advanced Manufacturing Research Center, there is a risk that global low inflationary pressures and the strength of sterling could generate more-than-expected downward pressure on consumer prices in the UK.
Key Quotes:
"The bottom line is that there is a risk that the combination of persistently low global inflation and the strength of sterling could weigh on prices here for some time,"
"Solid UK expansion, underpinned by strong domestic demand growth, leaves us on track to return inflation to target within the next two years. To deliver that outcome, a gently rising path for Bank Rate is likely to be required over the next few years,"
"It would be a particular concern if the pace of wage growth were to follow prices down. There is no evidence of that in the UK, where wage growth has picked up over the past six months."
Carney also said that cheap oil, which has been the primary downward pressure on consumer prices in Britain, will help bolster the UK GDP by "a little under 1 percentage point over the next three years, with a consequent boost in demand for UK exports of around 2.5%."
Key Quotes:
"The bottom line is that there is a risk that the combination of persistently low global inflation and the strength of sterling could weigh on prices here for some time,"
"Solid UK expansion, underpinned by strong domestic demand growth, leaves us on track to return inflation to target within the next two years. To deliver that outcome, a gently rising path for Bank Rate is likely to be required over the next few years,"
"It would be a particular concern if the pace of wage growth were to follow prices down. There is no evidence of that in the UK, where wage growth has picked up over the past six months."
Carney also said that cheap oil, which has been the primary downward pressure on consumer prices in Britain, will help bolster the UK GDP by "a little under 1 percentage point over the next three years, with a consequent boost in demand for UK exports of around 2.5%."