Staff of Reuters Read for 2 minutes (Adds comments and background) (Reuters) – LONDON, July 15 (Reuters) – Due to an unexpectedly high spike in inflation, Bank of England interest rate-setter Michael Saunders indicated on Thursday that the central bank may decide to end its current program of government asset purchases early. Consumer price inflation in the United Kingdom rose to 2.5 percent in May, according to statistics released on Wednesday, and Saunders warned that continued bond purchases later this year, when price increase is expected to approach 3%, risks entrenching inflation expectations. In a speech, he remarked, “For me, the topic of whether to curtail our current asset acquisition program early will be under consideration at our upcoming meetings.” “In my opinion, if activity and inflation indicators remain consistent with recent trends and downside risks to growth and inflation remain low… it may be reasonable to withdraw some of the current monetary support fairly soon,” he added. The Bank of England announced in November that it will acquire another 100 billion pounds ($139 billion) of government bonds over the next year. Andy Haldane, the BoE’s chief economist, was a lone voice at the Monetary Policy Committee meetings in May and June, his final before departing the bank, calling for the scheme to be discontinued sooner rather than later. Deputy Governor Dave Ramsden indicated on Wednesday that inflation could touch 4% this year, and that the Bank of England may need to restore its monetary stimulus sooner than envisaged. (1 dollar = 0.7203 pounds) (David Milliken contributed reporting.) (William Schomberg’s writing)/n
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