Bank of England (BoE) Deputy Governor Ben Broadbent said Thursday that commodity prices are more likely to drive inflation down in the next two years.
What matters for BoE policy are the outlook for the next 1-2 years.
I do not entirely agree with Michael Saunders on the duration of the inflation of the prices of the goods.
Goods prices are more likely to move lower, instead of on the rise, inflation within two years.
I am currently putting less weight on GDP data due to the turmoil below the surface.
Looking at the output gap is not the best way to judge inflation today.
It is we will likely have negative inflation in shipping costs and raw materials in about a year.
Now I am less sure where the natural rate of unemployment is in the short term.
It is surprising that there has been a large increase in vacancies despite the lack of employment, points to the labor market mismatch.
We put a lot of weight on inflation expectations are showing a mixed picture.
We will not allow inflation expectations to be seriously de-anchored; they have not been.
We will be very attentive, but second round inflation effects are not inevitable.