UK must avoid spike in inflation ‘like the plague’, says Bank of England chief economist | Economic news

Britain must avoid a spike in inflation “like the plague”, according to the chief economist of the Bank of England.

Andy Haldane’s comments to the Treasury Select Committee come amid evidence of soaring prices for many consumer and manufactured goods across the UK economy.

The bank’s chief economist, who is stepping down later this summer, voted to cut the Monetary Policy Committee’s quantitative easing program earlier this month, so that his concerns about rising prices are not a surprise.

Yet they highlight the concerns of many economists about the rising cost of living, which is driven in part by the economic recovery and in part by a shortage of raw materials around the world.

Mr Haldane said: “The situation we must avoid like the plague is one where inflation expectations adjust before they do or where we wait for positive evidence that the effects on inflation are not transitory before. to act.

“Because in those two cases, it would be too little too late.

“With this unprecedented degree of peacetime fiscal and monetary stimulus injected into an economy … this is why I reached my own judgment on why we should turn off the tap.”

He also said: “It is difficult to find very many goods or assets that do not increase [in price] for now, with the dishonorable exception of bitcoin. “

Bank Governor Andrew Bailey, however, said the recent rise in the consumer price index measures inflation, which showed annual price increases. 0.7% to 1.5% in April, was no surprise, and that the bank was trying to look through an inflation “bump”.

Mr Bailey said: “In the Monetary Policy Report, our forecast suggested that inflation … will hit the target and exceed 2.5% this year. We think then that it will come down again.

“There are some very hot ones …