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Inflation could prove 'more persistent' than expected

Bank of England's Monetary Policy Committee expresses ‘substantial uncertainties’ over path of inflation.

Inflation could prove 'more persistent' than expected

Inflation could remain higher for longer than previously expected, the Bank of England’s rate-setting committee has cautioned, as it repeated the ‘unusually uncertain’ outlook for the economy.

Although the Monetary Policy Committee (MPC)'s central view is that stubbornly above-target inflation will fall sharply by the end of the first part of 2012, the committee’s members have expressed concern that inflation could prove ‘more persistent’ as companies aggressively attempt to increase their profit margins, while expectations of above-target inflation become entrenched.

Both Bank of England and City economists have said that inflation will drop off sharply next year, perhaps having peaked in October, when the consumer prices index (CPI) rose 5% annually.

The Bank’s inflation expectations are crucial to its decisions over interest rates and its programme of quantitative easing (QE). At its November monetary policy meeting, the nine-member committee voted unanimously to both keep the base rate at its historic low of 0.5% and not to extend its QE programme beyond a total of £275 billion asset purchases, minutes published today show.

However the minutes – which are always closely scrutinised for signs of the Bank's intentions – showed that some MPC members thought ‘a further expansion of the asset purchase programme might well become warranted in due course’.

Howard Archer of IHS Global Insight said: ‘Despite some concerns within the MPC that inflation may not fall back as quickly as expected by the Bank of England, it still seems very much a question of when will further Quantitative Easing occur and how much more?’

Last week, the Bank warned that the UK’s economic growth prospects have worsened over the past three months, as it slashed its growth outlook for the rest of the year and 2012.

13 comments so far. Why not have your say?

James Park

Nov 23, 2011 at 11:57

' as companies aggressively attempt to increase their profit margins'. have these people learned nothing?

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t shepard

Nov 23, 2011 at 12:36

What a surprise!

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stiff watt

Nov 23, 2011 at 13:26

How will BoE's unusually inaccurate forecasts fair with the unusually uncertain economy?

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barry slater

Nov 23, 2011 at 13:35

Can anyone remember when the Bank of England got a forecast right?

These tossers have got every fiscal prediction they make wrong for years.

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Nov 23, 2011 at 13:43

The Bank of England consistently underestimate inflation, they then use this as an excuse to print loads of money. The economists at the Bank of England then deny that this printing money is the cause of inflation. you couldn't make it up.

When will these idiots admit that:


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Nov 23, 2011 at 16:10

But it is the BoE (with Govt backing) that is the primary cause of most of the inflation, by QE.

When you devalue money, import prices rise, just to make up for the loss of the original value.

Inflation has been a tool of governments for many, many years, particularly where the govt is a regular borrower, they inflate away part of debt, by 'counterfeiting' (printing) money.

Ben Graham ' Rising prices allow Uncle Sam to pay off his debts with dollars thave been cheapened by inflation. Completely eradicating inflation runs against the econo,ic self interest of any government that regularly borrows money'. Chapter 2, 3rd page.

It is obvious why the government wants above target inflation. King is being downright dishonest in his statements about 'stubbornly high inflation', because not only does it devalue the purchasing power of the not so well off, but also inflates the amount of tax that the govt gets from the higher prices, particularly VAT and fuel duty, of goods.

The letters from the governer to the chancellor are a farce, a waste of time and paper and a conspiracy to deceive, when it is government policy being implemented by King etc. King is the main source/cause of the inflation.

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Nov 23, 2011 at 16:52

Wish they would make up their bloody minds. It hardly fills us all with confidence when the B of E talks a load of old tut all the time. I think they are taking their cue from the railways " wrong sort of rain or leaves on the line" excuses.

Still it works for them so why not the B of E

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Anonymous 1 needed this 'off the record'

Nov 23, 2011 at 17:52


until these monkeys at the BOE take their own pension funds out of inflation linked investments - expect inflation.

Preaching deflation whilst calling inflation (where their own personal money is concerned). Is about as bad as you can get.

Sack em all. Get someone in who is prepared to stick to the job they were hired to do. Performance related, measurable pay FOR ALL. Not just the working class/low paid.

Yep that would include politicians, bankers, BOE, Police, FTSE executives. Then you can talk to me about removing rights for ordinary workers such as unfair dismissal rights.

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Nov 23, 2011 at 21:44

The BOofE haven't succeeded in their intended role

On the other hand, as a comedy act . . .

"Here's another nice mess I got you into"

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Tony Marshall

Nov 23, 2011 at 22:10

It's the dishonesty of it all that depresses me. I watch news of people in other countries on the streets because of their leaders' dishonesty and wonder how long before we see the same here.

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Anonymous 2 needed this 'off the record'

Nov 23, 2011 at 23:18

Those at the top of the Bank of England have become far more powerful since 1998. They are now misusing their power.

How do we rid ourselves of these unelected inflation addicts?

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Nov 24, 2011 at 10:16

When will we get seriously angry?

When will we do something about this?

Or are we just sheep?

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James Park

Nov 24, 2011 at 12:13

There's an old saying:' don't test the patience of a patient man '. And that's exactly what is happening. What the consequence of all this could be is anybody's guess.

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