Bank of England Policymaker Jonathan Haskel said the tightening of monetary policy is not the right choice for the foreseeable future.
“In the immediate term, the risk of a pre-emptive monetary tightening curtailing the recovery continues to outweigh the risk of a temporary period of above-target inflation,” he said in an online webinar on Monday.
“For the foreseeable future, in my view, tight policy isn’t the right policy,” said Haskel.
The higher oil price will provide a temporary boost to expected CPI inflation readings to above 3 percent by the end of the year, the policymaker noted. These pressures and erratic data readings should be temporary and therefore could be looked through, he said.
As much of inflation will be high temporarily due to the low base and the economy is fully not recovered yet and faces two headwinds over the coming months: the highly transmissible Delta variant and a tightening of the fiscal stance, tightening of monetary policy would not be the correction option.