26 Aug

Inflation to fall, says deputy governor

Inflation to fall, says deputy governor

Deputy governor of the Bank of England Charles Bean has suggested there is a good chance of inflationary pressures in the world economy diminishing over the coming months.

Speaking at an international meeting of central bankers in the US, Mr Bean warned that there is a possibility of the credit crunch continuing for some time, although he also said it is a "transitory" period and healthy economic growth will return in time.

Regarding inflation, he stated: "On the assumption commodity prices remain stable and if anything fall back, then inflation should drop back as we go through next year."

Such a situation could help lower the cost of mortgages as it would provide more scope for the bank's monetary policy committee (MPC) - of which Mr Bean is a member - to cut interest rates.

The number of economists who anticipate such a move by the MPC by the end of 2008 has doubled in a fortnight, according to Bloomberg.

In a poll on August 22nd the news agency found that half the economists questioned tipped a cut this year, compared with a quarter in a survey it held on August 8th.

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