Mark Carney is committed to keeping the U.K.’s minimal policy interest rate for a long time. The Bank of England Governor will not be challenged on this at Thursday’s meeting of the monetary policy committee. But later this year the facts may force him to change his mind.
The disinflationary winds which have been blowing through the United States and most of Europe finally reached the U.K. late in 2013. The annual inflation rate has fallen to 2.1 per cent. But over the last five years, Britain has been a laggard in inflation control. Since March of 2008, the British consumer price index has increased at 3.2 per cent annually, well above the Bank of England’s 2-per-cent target and the comparable 1.9 per cent in the U.S. and 1.7 per cent in the euro zone.