Bank of England Governor: May Tolerate Inflation to Support UK Economy

BlockBeats News, May 29th - Bank of England Governor Bailey stated that in order to support the UK's weak economy, the bank may tolerate inflation temporarily staying above the 2% target level, provided that there is no "second-round price effect."

Bailey pointed out that the Bank of England has tightened the monetary environment and impacted the economy by eliminating market expectations of interest rate cuts.

Bailey stated: "Given the weak performance of the real economy and the uncertainty about the scale and duration of the shock, tolerating temporarily high inflation above the target level to provide some support to the real economy is an appropriate way to address this trade-off." He added: "However, once there are signs of a second-round effect, this tolerance will decrease accordingly." (FXStreet)