ECB, BoE of­fi­cials see in­fla­tion ris­ing

The Pak Banker - - FRONT PAGE -

Stronger growth will pull in­fla­tion higher in the U.S. and Europe, ac­cord­ing to three top cen­tral bankers who voiced con­fi­dence that their re­gions will es­cape from head­winds that are keep­ing in­fla­tion too low.

Fed­eral Re­serve Vice Chair­man Stan­ley Fis­cher joined Euro­pean Cen­tral Bank Vice Pres­i­dent Vi­tor Con­stan­cio and Bank of Eng­land Gover­nor Mark Car­ney on a panel at the Kansas City Fed's an­nual re­treat in Jack­son Hole, Wy­oming, ded­i­cated to dis­cussing in­fla­tion dy­nam­ics. Their op­ti­mism has not been shared up un­til now by in­vestors, trad­ing in in­fla­tion­pro­tected bonds shows.

"Given the ap­par­ent sta­bil­ity of in­fla­tion ex­pec­ta­tions, there is good rea­son to be­lieve that in­fla­tion will move higher as the forces hold­ing down in­fla­tion dis­si­pate fur­ther," Fis­cher said in his pre­pared re­marks.

"With in­fla­tion low, we can prob­a­bly re­move ac­com­mo­da­tion at a grad­ual pace," Fis­cher said. "Yet, be­cause mon­e­tary pol­icy in­flu­ences real ac­tiv­ity with a sub­stan­tial lag, we should not wait un­til in­fla­tion is back to 2 per­cent to be­gin tight­en­ing."

While Fis­cher has left open the op­tion of an in­ter­est-rate in­crease when pol­icy mak­ers meet next month, he didn't ex­press a pref­er­ence for act­ing that soon.

"I do not plan to up­set your ra­tio­nal ex­pec­ta­tion that I can­not tell you what de­ci­sion the Fed will reach by Sept. 17," he told the sym­po­sium to­day.

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