As set out in our latest Statement on Monetary Policy, we expect inflation in both headline and underlying terms to be around 2½ per cent in 2010, and just a little higher in 2011.
Recently, there has been some discussion, prompted by senior staff at the International Monetary Fund (IMF), that central banks might aim for high inflation – say 4 per cent – as a way of giving them more scope to reduce official interest rates in future downturns. This idea does not seem particularly sensible.