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Carney: It’d be ‘extremely foolish’ to cut rates

Bank of England governor Mark Carney says it would be “extremely foolish” for the central bank to cut interest rates in a bid to tackle record low inflation.

The BBC reports Carney has continued to stress that low inflation is being driven by the sharp fall in oil prices.

In January, inflation fell to its lowest ever rate of 0.3 per cent.

Speaking at the House of Lords economic affairs committee, Carney said: “The thing that would be extremely foolish would be to try to lean against this oil price fall today [and] try to provide extra stimulus to try to get inflation up at this point in time.

“The impact of that extra stimulus …would happen well after the oil price fall had moved through the economy and we would just add unnecessary volatility to inflation. That would be foolish.”

He expects inflation to fall to around zero and stay there for much of the year.

But Carney added he was “vigilant” that low prices could eventually feed through to impact on spending and wages.

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  1. Is this the same Mark Carney that on the 12th of February indicated rates could be cut further if inflation continues to fall? So what’s changed so much in the last 4 weeks (that couldn’t have been known at the time) to suggest that stance could now be “foolish”?
    Great forward guidance!! Consistency at its best!!

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