Bank of England Deputy Governor Paul Tucker on Wednesday said inflation remains uncomfortably above target.
Speaking to the Association of Corporate Treasurers in Liverpool, Tucker said inflation will stay above 3 percent throughout the second quarter of this year, and possibly into the second half of the year.
The MPC will guide inflation back to target in the medium term, but in the near term there is considerable uncertainty about the path that it will follow, he added.
He sees weak headline GDP numbers in the first two quarters. Two temporary factors are likely to muddy the waters, leaving GDP growth well short of what has been suggested by surveys, he said.
Extremely weak construction output over the turn of the year would possibly be a substantial drag on recorded growth in the first quarter of the year, the central banker noted. Second, the additional bank holiday for the Queen's Diamond Jubilee in June will reduce the number of working days.
Nonetheless, he said the outlook for underlying growth from the February Inflation Report still looks broadly on track.
by RTT Staff Writer
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