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Managing a Decline in Inflation

Published online by Cambridge University Press:  26 March 2020

Ray J Barrell  and
Simon Kirby
Ray J Barrell
Affiliation:
National Institute of Economic and Social ResearchUK
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Extract

The Governor of the Bank of England wrote a letter to the Chancellor in April explaining why inflation had gone above 3 per cent in the previous month. Reaching the trigger point for a letter to be written looked likely, but not certain in January, when we said that ‘the odds are a little less than even that the Governor of the Bank of England will have to send an explanatory letter to the Chancellor.’ This probabilistic statement was based on the distribution of possible outcomes around our forecast. Inflationary pressures have been marginally higher than we might have expected, but we are not at all surprised by the event. There is also little either the Chancellor or the Governor could have done by January of this year to prevent the event happening.

Type
Articles
Information
National Institute Economic Review , Volume 200 , 01 April 2007 , pp. 53 - 55
Copyright
Copyright © 2007 National Institute of Economic and Social Research

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References

Barrell, R. and Hurst, I. (2007), ‘Monetary policy and global imbalances’, National Institute Economic Review, 199, pp. 34–9.CrossRefGoogle Scholar