Inflation target still firmly in our sights
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The Bank of
England is as "hard-nosed" as ever about hitting the Government's
inflation target, its chief economist would have said in Kent last
month if snow had not cancelled his visit.
Spencer Dale, a member of the interest-rate setting Monetary
Policy Committee (MPC), was due to have been guest speaker at the
Kent Business School 21st anniversary dinner at the University of
Kent in Canterbury.
In a transcript of his speech, he said that missing the two per
cent inflation target in most of the last 48 months had suggested
to some that the bank had "gone soft" on inflation.
But this was simply untrue. He blamed price shocks in energy and
other commodity prices, Vat and the falling value of sterling for
offsetting a "downward drag on headline inflation".
"My single most important message to you is that the MPC remains
as hard-nosed as ever in its determination to hit the inflation
target. That is the remit given to us by government and for which
we are accountable to parliament and the public."
Banks were still not lending normally and while they had
strengthened their funding and capital position, progress varied
from sector to sector. For small businesses, which relied more
heavily on bank finance, it remained "glacial".
Mr Dale said the economy was slowly recovering but there was
still a long way to go. The depth of the recession meant that
output and employment were likely to remain below what "felt
normal" for a considerable time. His final two words would have
been: "Happy birthday".
Friday, March 11 2011
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