The sharp fall in British inflation does not pose a risk of deflation and there is no need to take more measures to stimulate the economy, a policymaker at the Bank of England said in a newspaper column on Sunday. David Miles, who argued forcefully for action during the financial crisis as one of the nine rate-setters at the BoE, said in The Sunday Telegraph that some people were arguing that the plunge in inflation showed the need for a looser monetary policy.
"This seemed wildly implausible just six months ago and I have my doubts even now," he said, explaining that cheaper food and fuel meant households were better able to handle their debts and they were unlikely to postpone spending now. "But it does mean that there is no great urgency in starting the process of moving monetary policy back towards a more normal setting."
British inflation fell to a 12-year low of 1 percent in November and is expected to weaken further in the coming months, reinforcing expectations that the BoE will keep interest rates on hold at their record low of 0.5 percent deep into 2015.
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