- Mark Carney might need to explain why the Bank is off its inflation targets
- He is required to write a letter if inflation falls below 1% or rises above 3%
- Inflation has soared with the Brexit vote raising the cost of imports
Bank of England governor Mark Carney is heading for another Brexit row, as rising prices may force him to write to the Chancellor to explain why the Bank is overshooting its inflation targets.
Figures out on Tuesday are set to show that the official measure of inflation hit 3.1 per cent last month, say several big City forecasters.
That would compel Carney to account for the Bank’s failure to come close to its target of 2 per cent.
Bank of England governor Mark Carney is heading for another Brexit row, as rising prices may force him to explain to the Chancellor why the Bank is overshooting its inflation targets
He is required to write a letter to Philip Hammond if inflation falls below 1 per cent or rises above 3 per cent.
Inflation has soared as the fall in sterling after the Brexit vote raises the cost of imports. That put pressure on the Bank to raise interest rates, which it could do as soon as next month.
In August, Carney blamed uncertainty over Brexit for slowing down the economy.
Experts at HSBC, Oxford Economics and Fathom Macroeconomics expect the Consumer Prices Index for September to be 3.1 per cent, a rise on August’s figure of 2.9 per cent.
Joanna Davies, a senior economist at Fathom, said: ‘A rate hike next month merely cements the likelihood of a consumer-led recession, and is likely to cost Theresa May her job.’
The EY Item club, an independent forecaster, will say in a report out tomorrow that the Bank should hold off raising rates in November.