If that connection is in operation then the question arises as to how long such cautious behaviour might continue – and this is one of the uncertainties to which we point in the section on “risks” in the Outlook chapter of the Statement. There are of course other uncertainties as well.
But stepping back, underlying inflation has fallen by a substantial amount from the peak in 2008. It is worth recording that a combination, on the latest figures, of a 5 per cent unemployment rate and an inflation rate clearly “in the 2’s” is a pretty favourable one by the standards of recent decades.