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Cunliffe on inflation and its persistence

  • Cunliffe has said that we are seeing a surge in demand but how persistent that will be is the question.
  • He says we would expect some of these pressures and we expect transitory pressures. You have to see today's print in the context of what's happening in the UK and around the world.
  • Asked how long this is transitory, he says its a question of judgment, that's why you need central bankers rather than algorithms to set monetary policy. You need to look at underlying question: how long will this surge in demand carry on for? Commodity prices leads to a one-off increase in prices, but does that lead to a more sustained increase in prices? That's what the forecast round is for. Need to think about how you weight the risks and how you manage them. In August, will reach judgmenet, forward looking, on whether this is temporary or more persistent.
  • Asked about growth forecasts and the reopening, he says that the delayed reopening is broadly in line with assumptions. The 7.25% growth forecast is strong, but remember the economy shrank 20% in Q2-20. Will be fast growth, but that only brings us back to where we were before the crisis.

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