There are limits regarding overshooting inflation target – BoE’s J.Cunliffe

At his lecture today, BoE’s MPC member Sir Jon Cunliffe argued that there are limits to the magnitude that overshooting the inflation target can be tolerated.

Cunliffe suggested that policy rate may differ from natural rate when there is a trade-off between inflation and economic growth, adding that policy has found it difficult to follow the natural rate in response to FX rate shock.

He noted that natural rate is close to zero and could slip to the negative territory.