BOE Ramsden: Recent trends toward loan relatively stable inflation should continue

• The economy will continue to normalize, with the recent trend towards low and relatively stable inflation continuing.
• It is as at least as likely that the disinflationary process sustains it’s recent trend
• This would imply a scenario in which inflation stays closer to the 2% target throughout the first part of the forecast and falls below 2% more materially later on.
• Were uncertainties to diminish and evidence to point more clearly to further disinflationary pressures, then I would consider a less gradual approach to reducing bank rate.
• My starting point is to consider it more likely that pay awards will be in the bottom half of the expected 2-4% range than in the top half.
• It is not clear the extent to which NICs increase in the autumn budget will be transmitted into increase in prices, reduction in wages, increase in unemployment.

This article was written by Greg Michalowski at www.forexlive.com.