Inflation will rise says Bank of England Governor Mark Carney

Governor of the Bank of England, Mark Carney, speaks in Birmingham. Credit: PA

The Governor of the Bank of England has said that inflation will rise on products such as food because of the fall in the value of the pound.

Mr Carney said he was willing to allow an "overshoot" of the Bank's two percent inflation target if it safeguarded jobs and boosted economic growth.

Mr Carney added that between 400,000 and 500,000 jobs could have been at risk if the Bank had decided not to take action in the wake of the Brexit vote.

Mr Carney added that it was "going to get difficult [for those on lower incomes] as we move from no inflation to some inflation", and that food would be the first commodity to experience price rises.

Over the next few years, Mr Carney said that goods and other services would see higher inflation over the next "few years".

Mr Carney's comments were made in Nottingham at a public roundtable with charities and third sector organisations in the city.

The Governor and Deputy Governors of the Bank were in the Midlands for the day for a "regional roadshow" to explain the work of the Bank of England and take questions from an audience.

Speaking in Birmingham Mr Carney added that the Bank will not take instructions on its policies from politicians, saying that it became difficult for the Bank when politicians commented on its policies rather than its objectives.

"We are not going to take instruction on our policies from the political side," he added.

Mr Carney's comments come just a week after Prime Minister Theresa May took a swipe at the impact of the Bank's policies, hitting out at the impact of quantitative easing at the Tory Party conference last week.

Ms May said it was the rich who benefited from the Bank printing money and cutting interest rates in the years after the 2008 financial crash, while "ordinary working-class people" would make sacrifices in terms of frozen wages, job insecurity, affordable housing and wages undercut by competition from low-skilled immigrants.

Mr Carney speech was his first since the sharp fall of sterling which began last week after investors became increasingly alarmed that Ms May was seeking to break free of the European single market by opting for a "hard Brexit".

Sterling has lost around 18% of its value against the US dollar since the Brexit vote.