BoE rate rise after one-off price shock would be ‘self-defeating’ – Tenreyro

LONDON (Reuters) – The Bank of England should not raise interest rates to tackle a surge in inflation caused by higher prices for energy and semi-conductors if it thinks these effects will be short-lived, BoE policymaker Silvana Tenreyro said.

 

“Typically, for short-lived effects on inflation, such as the big rises in the prices of semiconductors or energy prices, it would be self-defeating to try to respond to their direct effects,” Tenreyro said in an interview with the Western Mail newspaper during a visit to speak with businesses in Wales.

“Activity has come in weaker than we anticipated in our last forecast and we remain a normal sized recession below the pre-Covid level of GDP,” she added.

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