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Bailey notes that the upside skew in today's forecasts can be viewed like alternative scenario

BOE
  • Bailey says that even if we judge second-round effects will take longer to fade than the took to build up, the view is that the restrictiveness of policy will see these effects continue to fade.
  • But he caveats: The rate of unemployment below which inflation begins to rise could have gone up, or that demand is stronger.
  • Bailey notes that in response to the Bernanke report, the upside skew in today's forecasts can be viewed as an alternative scenario where inflation remains more persistent.

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