Bank member says that fear of inflation ‘is exaggerated’

Mr Posen, a lone voice on the bank’s nine-man rate-setting committee in calling for more stimulus since last October, said Britain’s high inflation rate was due to “temporary factors” and would fall.

Low wage growth, less volatile energy prices and a stable pound mean worries about inflation expectations should not be over-estimated, he said.

“That fear is exaggerated,” he was quoted as saying in an interview carried on the Wall Street Journal’s website.

“The likelihood of it happening in the current economic environment seems extremely low.”

Central bankers had a tendency “to err on the side of being too tight”, he added.

“If there’s no wage growth – and there isn’t – and the pound has been stable and the futures markets tell us that energy prices, oil prices, are going to be flatter down the line, then today’s high inflation doesn’t have any forecasting worth for what we should do for next year,” he said.

Mr Posen called for central banks to launch a “roughly co-ordinated” round of monetary policy easing to stimulate the world’s economy, although he conceded there were currently no signs of that happening.

Britain’s coalition Government and the Bank of England are coming under increasing pressure to take more steps to boost the near-stagnant economic reco- very.

The BoE signalled on Wednesday it was on the verge of pumping in more money to support growth, potentially as soon as October.