Higher inflation expectations could lead to inflation becoming more persistent, but most indicators are consistent with expectations remaining anchored to the target, the Bank of England said Thursday.
"The prolonged period of above-target inflation could cause inflation expectations to become less well anchored," economists wrote in an article in the BoE's quarterly bulletin.
Moreover, there is tentative evidence that financial market measures of inflation expectations have become a little more responsive to developments in the economy.
Nonetheless, the report said there are currently few signs to suggest that prices and wages have increased as a result of higher inflation expectations.
Higher energy costs, import prices and value-added tax raised inflation, which forced the Monetary Policy Committee to judge that it is appropriate to look through the period of above-target inflation.
But there are few signs to suggest that they have affected wage growth and inflation yet, researchers said.
For comments and feedback: editorial@rttnews.com