Inflation will fall into line, says Bank of England's Posen

Bank of England policymaker Adam Posen said yesterday he still believed UK inflation would fall below target in the medium term but admitted there were risks from sterling's weakness against a stronger euro.

His comments gave no clear indication whether he will reiterate his call for more quantitative easing, or whether he will rejoin the majority of the BoE policymakers in voting to keep policy unchanged. "There could be sufficient growth in demand abroad that could influence not just demand for UK goods and services, but also the exchange rate," he said.

Posen said that he was closely watching these factors, but he did not think they were strong enough to offset his previous view that spare capacity in Britain's economy would push inflation below the BoE's 2 percent target.