-Mark Carney, BoE Governor
Kristin Forbes, a former economic adviser to President George W. Bush and now BOE's Monetary Policy Committee member, said that the Bank of England may have to hike interest rates to ensure financial stability if signs of asset bubbles emerge or household debt increases to unhealthy levels. Financial instability is seen as a potential threat stemmed from a prolonged period of record low interest rates, as low rates encourage market players to take riskier bets to get better returns. Nevertheless, Forbes highlighted that currently this was not a cause of concern. Forbes also said that the main reasons behind low inflation are external factors, including the sharp decline in oil and gas prices, decreases in food and other commodity prices, as well as lagged effect of Pound's appreciation. The rate-setter expected those drivers to fade quickly, resulting in a bounce back of inflation.
Mark Carney, BoE Governor, also said low inflation is temporary and will return to the 2% goal within two years. Inflation was 0.3% in January, marking the lowest rate of British consumer inflation since 1988. Carney said that falling prices of oil and food accounted for three-quarters of the current weakness in inflation. However, he stressed that those drivers were "temporary, one-off development". Carney also said that there was a probability that borrowing costs would be higher at the end of the central bank's three-year forecast.
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