Negative inflation: implications for monetary policy - BoE McCafferty

From bankofengland.co.uk

I am sure you have all seen the headlines: the UK economy is currently experiencing negative inflation for the first time since 1960. Inflation fell to -0.1% in April and is likely to remain around zero through the summer, well below the Monetary Policy Committee’s (MPC) target of 2.0%. As a result, the Governor has now had to write two open letters to the Chancellor of the Exchequer on behalf of the Committee, explaining why inflation has undershot by so much, and setting out how the MPC intends to respond. Also widely reported in the media last week was our decision not to change the stance of monetary policy. In ... (full story)