MNI BRIEF: BOE Deputy, Riksbank Head Wary On 'Look Through'

Bank of England Deputy Governor Clare Lombardelli and Riksbank Governor Erik Thedeen both made the case for caution in "looking through" elevated inflation, as supply shocks are more frequent and inflation expectations can become dislodged.  

Speaking at a Bank of Finland event Lombardelli, who opposed the BOE's most recent rate cut, said that "when inflation is higher, people are more attentive to it" and that high food prices may reflect the impact of climate change and she said that the idea that "you should look through certain sorts of supply shocks ... has been challenged by the recent experience."

Thedeen said that "look through is not always a good strategy" but he noted that the Riksbank, which cut the policy rate in September, was looking through planned VAT cuts and hikes but he agreed that the effects of climate change related price effects were new and could be persistent.