Financial markets are underestimating how persistent UK inflation will prove, the Bank of England’s governor has said, as he reiterated plans to keep policy restrictive for an extended period.
Andrew Bailey told MPs that investors were putting “too much weight” on current data releases that show a fall in headline inflation.
“We are concerned about the potential persistence of inflation as we go through the remainder of the journey down to 2 per cent,” he told the Treasury committee. “And I think the market is underestimating that.”
He was speaking after headline consumer price inflation fell to 4.6 per cent in October.
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