Ramsden: Inflation Expectations Remain Well-Anchored

Q: If you look at market inflation expectations e.g. 5y5y. These stand at a decade high, yet the BoE continues to pursue an expansionary QE. How closely are you watching those expectations measures?

• A (Bailey): If you look at the overall movement in markets we have seen a larger movement in real rates. It is something that is watched continually.
• A (Ramsden): Inflation expectations across the measures remain well anchored. When you look at the increase in bond yields since the February MPR, the large part of the increase in Uk yields has been in real rates with some pickup in inflation compensation i.e. they are being driven by improved economic prospects