A member of the Bank of England’s interest rate-setting committee has said he thinks UK inflation could return to the target level and stay there for longer than the central bank’s own predictions.
Dave Ramsden said the UK is no longer an “outlier” but a “laggard” when it comes to its inflation performance, meaning it is slowly but surely catching up with international peers including the US and the eurozone.
It comes as new data from the Office for National Statistics (ONS) showed the level of Consumer Prices Index (CPI) inflation eased to 3.2% in March.
The Bank of England, according to its latest forecasting published in February, thinks CPI inflation will return to its 2% target between April and June this year.
However, it is projected to stay there only temporarily before increasing during the second half of the year, and could rise to 2.8% by the start of 2025.
But Mr Ramsden, speaking at the Peterson Institute of International Economics in Washington DC in the US, said that over the last few months he had become “more confident” that the threat of persistent inflation in the country is weakening.
He said: “For me the balance of domestic risks to the outlook for UK inflation, relative to the February MPR (Monetary Policy Report) forecasts, is now tilted to the downside, with a scenario where inflation stays close to the 2% target over the whole forecast period at least as likely.”
The Bank’s forecast period spans the next three years.
“This leaves the UK as less of an outlier and more of a laggard in terms of recent inflation performance, and one that is now catching up quickly,” he said.
The Monetary Policy Committee (MPC) has its next meeting in May, but is not widely expected to start cutting interest rates until later in the summer.
Rates currently sit at a 15-year high of 5.25% after hikes by the Bank of England in an effort to quash inflation.
