Bank of England paper says above-target inflation threatens expectations anchor
The latest Bank of England quarterly bulletin, released today, highlights the risk of UK inflation expectations drifting away from the central bank's 2% target as the "prolonged period of above-target inflation" continues.
Inflation has been above target for three-and-a-half years – reaching a peak of 5.2% during that time – and has recently remained stable at 2.7–2.8%. A fall in fuel costs and air travel did, however, push inflation down to 2.4% in April.
In its May forecast, the Bank of
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