LONDON, May 15 (Reuters) - The Bank of England needs to
guard against second-round inflationary effects which could see
inflation bottom out at 4% or 5%, rather than return to its 2%
target, BoE Chief Economist Huw Pill said on Monday.
"The risk is ... that self-sustaining second-round-effect
momentum within the UK economy keeps inflation running at
above-target levels for a little bit longer", Pill said in an
online presentation.
"That's still compatible with quite a big fall in headline
inflation, but maybe headline inflation - other things equal -
getting stuck at that 4%, 5% level over the next two or three
years," he added.
"It's precisely that that we want to avoid, because if
inflation gets stuck at that type of level, it will tend to
carry on for a very long time."
(Reporting by David Milliken and Muvija M)
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