Bank of England governor Mark Carney has said he is willing to allow inflation to overshoot its 2% target, in order to boost economic growth and reduce unemployment.
Speaking at public roundtable in Nottingham, Carney (pictured) said he could let inflation go above its 2% target, which could happen as early as 2017.
UK CPI inflation currently stands at 0.6%, according to the Office for National Statistics, but Carney said the weakening of sterling could cause it to rise next year.
Sterling has depreciated against the US dollar by some 17% this year, much of this due to the outcome of the EU referendum, as well as worries over a potential 'hard' Brexit from the euro bloc.
As a result, some economists forecast inflation could reach 3% by the end of 2017 as the prices of imported fuel and food rise, a figure last seen in April 2012.
According to Reuters, Carney said: "We are willing to tolerate a bit of an overshoot in inflation over the course of the next few years in order to avoid [rising unemployment], to cushion the blow and make sure the economy can adjust as well as possible."
The governor said food would be the first area to experience price rises, evidenced by the price war between Tesco and Unilever earlier this week.
Addressing monetary policy, Carney also said the move in August to cut interest rates to 0.25% had helped to support the economy. However, he warned the Bank is unable to guarantee long-term economic prosperity for the UK.
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