Andy Haldane, the Chief Economist of the Bank of England (BoE), said on Friday that the high degree of a two-sided uncertainty on inflation is understandable, as reported by Reuters.
Additional takeaways
“If economies bounce-back as the vaccination programme is rolled-out, policy stimulus could over-stimulate the economy and, with it, inflation.”
“Reasonable chance disinflationary trends could persist and indeed be amplified by the COVID crisis, posing downside inflation risks.”
“Few, if any, historical precedents to help judge the response of the economy to this scale of shock and degree of policy stimulus.”
“Costs to the economy and the BoE of getting these judgements wrong could be significant.”
Market reaction
The GBP/USD pair remains under strong bearish pressure following these remarks and was last seen losing 0.62% on the day at 1.3925.
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