Bulletin

Carney confident higher wages will prevent deflationary spiral

Bank of England

Bank of England Governor Mark Carney has sought to ease concerns that Britain faces a deflationary spiral after inflation fell to 0.3% last month, claiming the strength of the recovery meant inflation would return to its 2% target within the next two years He said that despite global forces pushing down prices, the return of inflation-busting wages would push up domestic demand and prices, forcing the Bank to raise interest rates. However, Mr Carney said inflation was likely to sink further over the coming months, delaying a rise in rates and forcing the Monetary Policy Committee to be aware of the possibility of a deflationary spiral becoming entrenched. The pound fell yesterday after Carney signalled he may delay raising rates to keep sterling from strengthening too far and damaging growth prospects. He warned that if the pound appreciated too much it could hurt exports and stoke deflation by driving down wages.

 

Note: News bulletin content has been provided by a third-party and is not the opinion of Santander.

Other Articles

Cornwall is a land steeped in legend but this salty business success story is no myth.

Santander Incubator social enterprise, Liverpool Girl Geeks, has secured £20k in Rosa funding to help them grow their programmes and…

With the second-largest economy in Latin America, Mexico should be a core focus for UK exporters looking at the region

Travelstar European Ltd, one of the West Midlands’ leading coach hire companies, has moved to larger premises in Portland Street, Walsall,…

Santander Incubator social enterprise, Liverpool Girl Geeks, has secured £20k in Rosa funding to help them grow their programmes and…

The UK’s aerospace industry is the focus of our second quarterly bulletin in partnership with EEF, the manufacturer’s organisation. We take…

Where Next?