The U.K. can expect faster inflation in the years ahead as it reorients its economy toward new markets and away from the European Union, Bank of England Gov. Mark Carney said Monday.
In remarks prepared for delivery in Washington, Mr. Carney said Britain's planned departure from the EU in 2019 is already fueling inflationary pressure in the U.K. as weak investment and falling immigration restrain the economy's capacity to grow.
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He reiterated the BOE's message that interest rates may need to rise "within months" to keep a lid on price growth, after annual inflation hit 2.9% in August, well in excess of the BOE's 2% target.
But he added that he expects inflationary pressure may prove more persistent as the U.K. pivots its economy away from the EU and toward other markets farther afield, a process he said could take years.
In a speech in honor of former International Monetary Fund director Michael Camdessus, he described Brexit as a unique example of "deglobalization" following decades of ever-greater integration throughout the global economy.
"On balance, the de-integration effects of Brexit can be expected...to be inflationary," he said.
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(END) Dow Jones Newswires
September 18, 2017 11:39 ET (15:39 GMT)