BoE´s Broadbent unconcerned by prospect of inflation somewhat above target

Inflation would probably rise somewhat above Bank´s inflation target over the next few years, but the pound´s flexibility was an important shock-absorber for the economy, a top Bank of England official said.

Ben Broadbent was asked on BBC radio if the BoE would intervene should Sterling weaken too much.

“Having a flexible currency is an extremely important thing, especially in an environment when your economy is facing a shock that’s different from your trading partners. In the shape of the referendum, we’ve had exactly one of those shocks. Allowing the currency to react to that is a very important shock absorber,” he answered.

Neither did Broadbent indicate any concern about the prospect of inflation rising "somewhat" above the monetary authority´s target over he next few years.

“If we had wanted to ensure that we set policy -- the level of interest rates -- in such a way as to ensure there was no chance of it rising above target, then we would have had to have set tighter policy,” Broadbent said.

“That would have meant lower economic growth and that would have increased the chances of unemployment going up.”

As of 0805 BST cable was trading 0.04% higher to 1.2191, having earlier hit an intra-session low of 1.2150.