BOE’s Pill: There is an ongoing disinflation process in the UK

• But we cannot declare that the job is done
• Need to maintain some degree of policy restriction to squeeze out price pressures
• Other measures of pay growth are easing but still a bit too high
• This is a reason for caution and carefulness in loosening policy

Pill adds that they are optimistic that the upwards blip in inflation won’t lead to any second round effects. Well, core annual inflation is yet to dip under 3% in the UK. So, they are right to be “careful”. And I know that they are just doing their job in deflecting and dismissing stagflation concerns but yeah, just be aware that it will be a key phrase in the months ahead for the UK economy.

This article was written by Justin Low at www.forexlive.com.