BoE's King on UK inflation

In a speech given on 27 August Mervyn King, governor of the Bank of England, said that inflation expectations in the UK may shift significantly even if the cause of the change in prices is due to temporary factors.

'Inflation expectations may be sensitive to a large but temporary shock that moved inflation outside the range within which it has remained for years,' he said in the speech.

'With their belief in stability jolted, households' inflation expectations might move by much more than was

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