Predicting inflation straying from its target does not mean the Bank of England should automatically change interest rates, Monetary Policy Committee member Kate Barker said on Monday. "The response to a medium-term central forecast for inflation which is away from the target in either direction, is not an automatic change in the repo rate," Barker said, according to the text of a speech in Washington. "Rather, the risks to the outlook, and the question of whether a change should be delayed, will be considered." The BoE left interest rates on hold at 4.75 percent in February and March despite having predicted inflation would rise above its 2.0 percent target next year, as MPC members have focused on downside risks such as lacklustre consumer spending. Barker also repeated arguments for why the MPC should not target asset prices like the exchange rate or the housing market. "The first is the considerable uncertainty about whether or not a bubble exists -- and if it does, how serious it is," she said. --MORE 2341 Local Time 2041 GMT
