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The Bank of England Governor (BoE) Mark Carney said in a speech on Wednesday that the consumer price inflation could turn negative, but it is expected to rise towards the end of the year. He noted that low inflation was driven by falling energy prices, lower food prices and strong pound.
The consumer price inflation was 0% in March, below the central bank's 2% target.
Carney pointed out that he was not worried about low inflation. "A temporary period of falling prices should not be mistaken for widespread and persistent deflation," he said. The BoE governor added that he expects inflation to return to the BoE's 2% target within two years.
"The most important legacies of the financial crisis are the persistent headwinds which continue to weigh on the U.K. economy," Carney also said. He added that it will need more gradual rises in interest rates than in previous cycles.
The BoE governor noted that interest rates will have to remain low due to weaker global demand and tighter fiscal policy.