(Adds detail from interview)
LONDON, March 24 Bank of England policymaker
Gertjan Vlieghe said a rise in inflation to more than 3 percent
might not prompt him to consider raising interest rates because
the increase would probably be temporary, The Times newspaper
reported on Friday.
Vlieghe said inflationary pressure at the moment was largely
due to sterling's depreciation since last year's Brexit vote and
the subsequent rise in import prices, rather than reflecting
unexpectedly strong growth since June 2016's referendum.
The dovish BoE member said that if the weaker pound pushed
up prices faster than the BoE had estimated, inflation could hit
3.0 or 3.5 percent this year, above the Bank's 2 percent target.
"But it would also mean it would come down faster
afterwards," Vlieghe said, adding a quick rise and fall in
inflation might not have any impact on the BoE's record-low
interest rates or its massive bond-buying programme.
"If inflation is higher than expected because we think there
is a general pick-up, then it is not just the exchange rate
doing the work, that is absolutely something we need to respond
to and I will be joining the response to that," he said.
The BoE expects inflation - which stood at 2.3 percent in
the 12 months to February - to peak at nearly 2.8 percent in the
second quarter of next year.
Vlieghe is considered one of the strongest advocates for
keeping interest rates low among the BoE's policymakers. He
voted in July last year to cut rates, a month before the rest of
his peers decided to lower Bank Rate to 0.25 percent.
Last week, fellow Monetary Policy Committee member, Kristin
Forbes, voted to raise rates back to 0.50 percent and some other
policymakers said it would not take much more news on rising
inflation or stronger growth for them to follow suit.
On Thursday, BoE Deputy Governor Ben Broadbent sounded less
worried about inflation, saying there were signs that consumers
were cutting back on spending, and that the current "sweet spot"
for exporting businesses, after the fall in the value of
sterling, might not last.
(Reporting by Kanishka Singh in Bengaluru and William Schomberg
in London; Editing by Bill Rigby and David Milliken)