Agustín Carstens challenges Bank of England’s outlook, which estimates inflation will fall next year
Carstens said a trend for manufacturers to cut back extensive global supply chains in response to the pre-pandemic trade war between the US and China and, more recently, sanctions on Russia, meant production costs would be higher for a longer period than central banks and independent economists currently estimate.
“What starts as temporary can become entrenched, as behaviour adapts if what starts that way goes far enough and lasts long enough. It’s hard to establish where that threshold lies, and we may find out only after it has been crossed,” he said., which estimates that inflation should begin to fall next year after only a modest rise in interest rates., suggested comparisons with the 1970s when inflation was persistently higher were unrealistic.
He said changes to the UK labour market since the 1970s – when trade union membership was at its peak – meant workers do not have the same power to demand higher wages to compensate for higher inflation. This would make it unlikely for the UK to experience a wage-price spiral, whereby workers demanding higher pay leads companies to raise their prices.
Unlike Carstens, who said there was a risk of high inflation becoming entrenched in the public consciousness, Cunliffe said there were few signs of this so far.“I am not at present convinced that we will inevitably have to lean heavily and constantly against an embedding of an inflationary psychology.”
Australia Latest News, Australia Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Boy falls from Movie World ride, suffers head injuriesBREAKING A boy has been rushed to hospital with significant head injuries after falling from a ride at Movie World in the first week of school holidays.
Read more »
‘Follow our lead’: federal government calls for world to follow its climate policyThe United Nations has released yet another report calling for drastic climate action amid rising global greenhouse emissions.
Read more »
‘Follow our lead’: federal government calls for world to follow its climate policyThe United Nations has released yet another report calling for drastic climate action amid rising global greenhouse emissions.
Read more »
Wallabies, Wallaroos lock in Test dates ahead of World CupThe SCG will host the final Wallabies vs England Test in a three-game series later this year, while the Wallaroos will play Tests against Fiji and Japan before this year's World Cup.
Read more »
Young boy hospitalised after falling from Movie World rideA boy has been taken to hospital in a serious but stable condition after falling from a ride at Movie World. 7NEWS
Read more »
IPCC report: ‘now or never’ if world is to stave off climate disasterGreenhouse gas emissions must peak by 2025, say climate scientists in what is in effect their final warning
Read more »