Chillax

13 Jan 2015 By Swaha Pattanaik Follow @swahapattanaik

Mark Carney has to write George Osborne a letter. The Bank of England governor will explain to the chancellor why the inflation rate is at a 14-year low, and what the central bank plans to do about it. Breakingviews knows what to say. For now the best policy is inaction.

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Britain’s annual inflation rate fell to 0.5 percent in December from 1 percent in November, the Office for National Statistics said on Jan. 13.

Bank of England Governor Mark Carney is required to explain to Finance Minister George Osborne in an open letter the reasons for inflation coming in a full percentage point or more above or below the bank’s 2 percent inflation target. The BoE said on Jan. 13 it will publish its explanation of why British inflation is so low on Feb. 11, alongside the publication of its quarterly economic forecasts.

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