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Inflation drop no cause to fret, says Bank expert

Senior Bank of England policymaker David Miles has said the sharp fall in inflation does not raise the risk of damaging deflation, and the Bank does not need to resume buying government bonds in response. Miles also said the slowing of inflation meant there was no great urgency to start raising interest rates. He argued in a speech: 'Although actual inflation rate is now very low, and might temporarily dip down to zero and turn slightly negative, this is a long way from the sort of deflation trap that is really worrying. This fall in inflation, rather than increasing the burden of debt in a way that can become self-reinforcing in a downwards spiral, is boosting the disposable income of households and making the burden of debt easier.'

 

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