Speaking during a visit to the University of Leeds, Dr Broadbent also said Britain’s tight labour market was likely to be a more persistent source of inflation.
Dr Broadbent suggested that forecast would probably have to be raised further above the central bank’s 2 per cent target.
He said: “The aggregate rate of inflation is likely to rise further over the next few months and the chances are that it will comfortably exceed 5 per cent when the Ofgem cap on retail energy prices is next adjusted, in April.”
Dr Broadbent also said the recent jump in inflation for goods, driven partly by a global supply chain squeeze, was likely to fade and in some cases reverse, before a Bank of England rate rise would have an impact.
“I still think it’s more likely than not - looking a couple of years ahead as we should - that these pressures on traded goods prices are more likely to subside than intensify,” he said.
Dr Broadbent was one of the seven members of the central bank’s nine-strong Monetary Policy Committee (MPC) who voted to keep interest rates on hold last month, which shocked financial markets that had been betting on a hike.
He used his speech to stress how moves such as a changes to interest rates by a central bank could take two years to have an effect on the economy.
“What we can do - and what is the best possible approach - is to think at every meeting about the level of interest rates that will maximise our chances, a couple of years from now, of hitting the inflation target exactly,” he said. “That is what we will continue to do.”
He delivered the speech at the Leeds University Business School.
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