His comments come shortly after the central bank improved its outlook for the UK economy. The central bank now estimates the UK is on track for 7.25% growth this year, slightly above analysts’ expectations and up from a previous estimate of 5%.
The relatively rapid roll-out of vaccination in the UK, the drop in the number of Covid-19 cases across the country and the gradual relaxation of restrictions on economic activity were cited as reasons which led the central bank to revise its growth forecasts for 2021.
On inflation, the BOE said it expects the consumer price index to temporarily exceed its 2% target towards the end of this year, mainly due to the price movement of raw materials.
He sees inflation coming back to around 2% in the medium term.
“We believe the current policy is appropriate. We have a forecast which has a very substantial rebound but which subsequently returns more in balance, ”Andrew Bailey, governor of the BOE, told Joumanna Bercetche of CNBC on Thursday.
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“Inflation is going to be a bit bumpy this year in that sense as these base effects come in and out. At the moment, we don’t see any evidence to alarm us regarding whether this will fit into higher inflation. But we’re going to watch he’s very careful, ”Bailey said.
The UK economy contracted by 10% in 2020 following the coronavirus pandemic – the worst annual performance in more than three centuries.
It was more severe compared to most other European economies, in part due to a slower movement to implement strict public health measures to curb the spread of the coronavirus.