- Mark Carney, Bank of England Governor
Bank of England Governor Mark Carney and the Chief Economist, Andy Haldane, indicated that low inflation is the most serious problem facing the economy and they watch closely downside risks to inflation as the central bank emphasizes the reasons for keeping monetary policy loose. Carney highlighted that there were massive disinflationary forces coming from the UK's trading partners, as well as commodity prices, which have dropped quite sharply. The comments of the officials, as well as quarterly Inflation Report released last week, intended to reinforce the view that the BoE was in no mood to lift interest rates in the foreseeable future. Market participants now expect policy makers to increase rates as soon as October 2015.
Inflation in Britain hit the lowest level in five years in September, falling to 1.2% compared to 1.5% in August, dropping further away from the Bank of England's 2% target. Britons' expectations for inflation over the next 12 months held unchanged in October at 1.9%, matching the lowest reading since 2009, a monthly poll by YouGov revealed. Last week the Bank of England cut its near-term inflation projections, but stressed that it expects inflation to return to the central bank's official target by the end of the three-year forecast period.
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