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BoE’s Mann: Falling headline inflation, high core, make policy difficult
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WASHINGTON (Reuters) – Falling energy prices will lower headline inflation towards the Bank of England’s 2% target, but persistent underlying inflation will make it hard for the Bank of England to set monetary policy as the year progresses, Bank of England monetary policy committee member Catherine ...
WASHINGTON (Reuters) – Falling energy prices will lower headline inflation towards the Bank of England’s 2% target, but persistent underlying inflation will make it hard for the Bank of England to set monetary policy as the year progresses, Bank of England monetary policy committee member Catherine Mann said on Wednesday.
“Gas prices in particular are on the down slope, and that type of dynamic is going to be very important in driving headline inflation down,” Mann said in remarks to a National Association for Business Economics meeting.
But “core goods and services are trending up … It is going to make it very difficult to do our job,” since the BoE’s 2% target is formally set in relationship to headline inflation, not the higher, more persistent, core number, she said.
(Reporting by Howard Schneider; Editing by Chris Reese)
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. Central banks attempt to limit inflation to keep the economy running smoothly.
Monetary policy refers to the actions taken by a country's central bank to control the money supply and interest rates to achieve macroeconomic goals such as controlling inflation, consumption, growth, and liquidity.
Core inflation is a measure of the long-term trend in prices, excluding items that face volatile price movement, such as food and energy. It provides a clearer view of inflation trends.
Headline inflation is the total inflation in the economy, including all items, such as food and energy prices. It is often used to gauge the overall price level in the economy.
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