The UK's BoE Deputy Governor, Ben Broadbent, posted his recent speech 'Mismatch', which covered topics that the BoE are looking at, such as inflation, labor, and monetary policy, etc.
Some of the most notable comments from Broadbent were:
There’s a good case that the recent increase in inflation could just be temporary, and I'm not convinced that goods price inflation will persist.
The appropriate response to rising prices at this point may well be to do nothing; lumber prices are two-thirds below their may peak, implying annual inflation rates likely to be negative in the Spring.
Retail goods price inflation is likely to rise further in the near term with labor costs being an important indicator of where prices are going. I’m not convinced that the current inflation in retail goods prices should in and of itself mean higher inflation 18-24 months ahead, the horizon that is more relevant for monetary policy.
What, in view of all this, is the appropriate policy response to the current inflation? Most of the overshoot relative to target in the latest CPI numbers – more than all of it, on some measures – reflects unusually strong inflation in goods prices. In all likelihood that will also be true of the larger overshoot we’re going to see towards the end of this year, and if this was only a story about global goods prices – and depending on how confident you were in its transitory nature – I think the answer could well be ‘nothing.’