Bank of England can allow inflation to rise

Bank of England is willing to tolerate above-target inflation to support growth and employment after 'Brexit', Governor Mark Carney said Friday.
"Our job is not to target the exchange rate, our job is to target inflation," he said during a public meeting in Nottingham.

"But that doesn't mean we're indifferent to the level of sterling. It does matter, ultimately, (for) inflation and over the course of two to three years out, so it matters to the conduct of monetary policy." British inflation is expected to rise above 2% in 2017 because of the sharp fall in the value of the pound. At the same time, the economy is expected to slow.

The bank is "willing to tolerate a bit of overshoot in inflation over the course of the next few years" in order to avoid an increase in unemployment, that could be 400-500 thousands higher in case of insensibility to the issue, and "to cushion the blow", the BoE Governor added. Carney did not rule out the potential for monetary easing this year.

The BoE's next announcement on rates is due on November 3.