Bank of England policy chief Catherine Mann said on Thursday that the The consequent incorporation of current headline inflation into companies’ own prices is a cause for concern because it may point to a situation in 2023 where prices remain strong even as demand remains weakas reported by Reuters.
Additional comments
The Bank of England mandate recognizes that current shocks will move inflation away from the 2% target and that appropriate monetary policy can temporarily tolerate such caution.
These days, there is uncertainty at all horizons and between all relationships, and therefore the shocks continue to affect financial intermediation and the real economy.
I am watching the polls and other data closely to see if and when companies will get the demand signal that would alter their price expectations.
If the hit to consumption is tempered by other policies or savings and other behavior, it may be well into 2023 before businesses get the signal from demand.
Source: Fx Street
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