Ramsden also said the UK economy could get back to its pre-pandemic level during the current quarter
Inflation could reach by the end of 2021 according to the deputy governor of the Bank of England, who also said the central bank may have to consider ending its stimulus earlier than anticipated.
In a speech about the UK economy Sir David Ramsden last night said that the recovery remained unbalanced, which could lead to inflation far exceeding the BoE’s target level of 2%.
This comes soon after data showed that UK inflation soared to 2.5% in June.
“I wouldn’t be surprised to see the whole inflation rate potentially rising as high as 4 per cent for a period later this year,” Ramsden said.
“Based on the rapid pace of developments since we published our May forecasts and the shift in the balance of risks, I can envisage those conditions for considering tightening being met sooner than I had previously expected,” he added.
The governor of the Bank of England also said that the UK economy could get back to its pre-pandemic level during the current quarter. This, he added, was in part down to low interest rates and fiscal stimulus.
This is quicker than previous expectations of the British economy getting back to its pre-coronavirus level during the final three months of the year.
“Based on the rapid pace of developments since we published our May forecasts and the shift in the balance of risks, I can envisage those conditions for considering tightening being met somewhat sooner than I had previously expected,” Ramsden said.
“That reflects my current assessment that on balance I put more weight on my inflationary than my disinflationary scenario,” he added.
