Drehmann, M and Juselius M (2012), “Do debt service costs affect macro-economic and financial stability?”, BIS Quarterly Review,September 2012. Kohn (2013), “The interactions of macro-prudential and monetary policies: a view from the Bank of England’s Financial Policy Committee,Speech given to the Oxford Institute for Economic Policy, http://www.bankofengland.co.uk/publications/Documents/speeches/2013/speech692.pdf.
Although most measures of longer term inflation expectations currently stand at around our 2% target, some indicators have edged up and warrant continued monitoring. A lasting rise in inflation expectations is an upside risk to inflation, also over the medium term. Persistently high inflation rates are risky, particularly since they could make inflation expectations adaptive.