"The only difficulty that is caused by Europe is that it provides an additional drag on growth. But that doesn't dictate the monetary policy of the Bank of England"
- Mark Carney, BoE Governor
The Bank of England Mark Carney said that further monetary policy actions will be influenced by global growth, inflation and a performance of the Euro zone, which is currently struggling to grow and is mired into deflationary spiral. Thus, the Governor once again stressed that ongoing headwinds will shape monetary policy decisions at the BoE's MPC meeting in November. Carney also said that the central bank predicted that the UK's robust economic growth will fade slightly towards the end of 2014, and would continue to focus on domestic inflationary pressures that might come from the labour market. Consumer price inflation is expected to have fallen further below the central bank's goal and the latest BoE projection for the third quarter.
The UK CPI has dropped dramatically this year to hit 1.5% in August, which is well below the official 2% target. This allows the central bank to manoeuvre in an ultra-loose monetary environment without being concerned about price stability in the medium term. Much of that deceleration in inflation is due to early 2014 Pound appreciation and subdued domestically-generated price pressures. The inflation rate is expected to slow further to 1.4% in September down from 1.5% in the previous month, owing to those downward pressures
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