(Reuters) – Bank of England interest rate setter Megan Greene said on Tuesday that she was concerned by increases in the public’s expectations for future inflation, but added that they remained anchored.
Surveys published by the BoE and Citi/YouGov show inflation expectations have risen in recent months.
While the public are poor at predicting inflation, central bankers watch their expectations closely for signs that Britons might intend to push for bigger wage rises or be less resistant to paying higher prices.
“I do think inflation expectations do remain anchored, but I think it is a concern that they’ve been rising for the past six months,” Greene told a conference hosted by Britain’s Royal Economic Society.
“It’s not something that’s flashing red lights at this point,” Greene added.
Greene said she thought a trade war involving retaliatory tariffs would on net be “probably disinflationary” for Britain’s economy, although she said the modelling needed to be taken with a pinch of salt at this point.
Exchange rates were likely to be a key way the effect of trade wars would be transmitted across economies, Greene said.
“It’s also possible that the dollar’s role as a global reserve currency could be undermined a little bit by all of the uncertainty that we’re seeing, and so we don’t know how the exchange rate will behave,” she told the audience after her speech.
(Reporting by Andy Bruce; editing by David Milliken)
