The Bank of England (BOE) Deputy Governor Ben Broadbent said on Thursday, the prices of goods are more likely to drive inflation lower in the next two years.
What matters for BOE policy is outlook for next 1-2 years.
I am not quite there with Michael Saunders on duration of goods price inflation.
Goods prices more likely to be pulling down than pushing up inflation in two years’ time.
I am putting less weight on GDP data currently due to churn under the surface.
Looking at output gap not best way to judge inflation currently.
We are likely to have negative inflation in shipping costs and commodities in around a year.
I am less confident now about where natural rate of unemployment is in short turn.
Striking that there has been big increase of vacancies despite furlough, points towards labour market mismatch.
We put a lot of weight on inflation expectations, they are showing mixed picture.
We will not let inflation expectations become seriously unanchored; they have not been.
We will be very watchful but it is not inevitable there will be second round inflation effects.
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