The senior Bank of England monetary policymaker Ian McCafferty has admitted that it is "easy" to see why people might think that the Bank has become tolerant of higher inflation.
Mr McCafferty, pictured, also launched a defence of the existing Bank inflation targeting framework and warned against "repeating the mistakes of the past", in a move likely to be seen as a hawkish message to the incoming Governor, Mark Carney.
In a speech in London, Mr McCafferty said although the Monetary Policy Committee has not become more relaxed about the cost of living rising above the Bank's official 2 per cent target, "it would be easy to see why some might think so" given persistent overshoots since the financial crisis.
Over the past five years the Bank has had to write to the Chancellor 12 times to explain why inflation has been more than 1 per cent above target.
Pointing to the UK's experience of double-digit inflation rates in the 1970s and 1980s, Mr McCafferty added that "there is a risk that the low and stable inflation of the past two decades is now being taken for granted". He stressed the need for policymakers to avoid "complacency".
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